United States v. Westinghouse Air Brake Technologies Corp., Proposed Final Judgment and Competitive Impact Statement, 78187-78201 [2016-26781]

Download as PDF Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices with section 207.30 of the Commission’s rules. All written submissions must conform with the provisions of section 201.8 of the Commission’s rules; any submissions that contain BPI must also conform with the requirements of sections 201.6, 207.3, and 207.7 of the Commission’s rules. The Commission’s Handbook on E-Filing, available on the Commission’s Web site at https:// edis.usitc.gov, elaborates upon the Commission’s rules with respect to electronic filing. Additional written submissions to the Commission, including requests pursuant to section 201.12 of the Commission’s rules, shall not be accepted unless good cause is shown for accepting such submissions, or unless the submission is pursuant to a specific request by a Commissioner or Commission staff. In accordance with sections 201.16(c) and 207.3 of the Commission’s rules, each document filed by a party to the investigation must be served on all other parties to the investigation (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service. Authority: This investigation is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.21 of the Commission’s rules. By order of the Commission. Issued: November 1, 2016. Lisa R. Barton, Secretary to the Commission. [FR Doc. 2016–26780 Filed 11–4–16; 8:45 am] BILLING CODE 7020–02–P DEPARTMENT OF JUSTICE Antitrust Division sradovich on DSK3GMQ082PROD with NOTICES United States v. Westinghouse Air Brake Technologies Corp., Proposed Final Judgment and Competitive Impact Statement Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h), that a proposed Final Judgment, Hold Separate Stipulation and Order, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in United States of America v. Westinghouse Air Brake Technologies Corp. et al., Civil Action No. 1:16-cv-02147. On October 26, 2016, the United States filed a Complaint alleging that Westinghouse Air Brake Technologies Corp.’s (‘‘Wabtec’’) VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 proposed acquisition of Faiveley Transport S.A. and Faiveley Transport North America would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed at the same time as the Complaint, requires Wabtec to divest Faiveley’s U.S. freight brakes business. Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Antitrust Division’s Web site at http://www.justice.gov/atr and at the Office of the Clerk of the United States District Court for the District of Columbia. Copies of these materials may be obtained from the Antitrust Division upon request and payment of the copying fee set by Department of Justice regulations. Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division’s Web site, filed with the Court, and, under certain circumstances, published in the Federal Register. Comments should be directed to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, Department of Justice, 450 Fifth Street NW., Suite 8700, Washington, DC 20530 (telephone: 202–307–0924). Patricia A. Brink, Director of Civil Enforcement. United States District Court for the District of Columbia United States of America, U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW., Suite 8700, Washington, DC 20530 Plaintiff, v. Westinghouse Air Brake Technologies Corp., 1001 Airbrake Avenue, Wilmerding, PA 15148, Faiveley Transport S.A., Le Delage Building, Hall Parc— ˆ ` ´ Batiment 6A, 6eme etage, 3, rue du 19 mars 1962, 92230 Gennevilliers, CEDEX—France and Faiveley Transport North America, 50 Beachtree Boulevard, Greenville, SC 29605, Defendants. Case No.: 1:16-cv-02147 Judge: Tanya S. Chutkan Filed: 10/26/2016 Complaint The United States of America, acting under the direction of the Attorney General of the United States, brings this civil antitrust action to enjoin the proposed acquisition of Faiveley Transport S.A. and Faiveley Transport North America (collectively, ‘‘Faiveley’’) by Westinghouse Air Brake Technologies Corporation (‘‘Wabtec’’) and to obtain other equitable relief. The United Sates alleges as follows: I. Introduction 1. Wabtec proposes to acquire Faiveley, a global provider of railway PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 78187 brake equipment components that make up a critical system intimately linked to both the performance and safety of trains. Faiveley produces its brake system components in the United States through its subsidiary, Faiveley Transport North America. Wabtec is a leading manufacturer of rail equipment used in the assembly of freight cars built for use in the U.S. freight rail network. For purchasers of components of freight car brake systems, Wabtec and Faiveley are two of the top three suppliers approved by the Association of American Railroads (‘‘AAR’’), with combined market shares ranging from approximately 41 to 96 percent for many of the products in which they compete. Where a product must be AAR approved, customers must source it from an AAR-approved supplier of that product. 2. In 2010, Faiveley entered into a joint venture with Amsted Rail Company, Inc. (‘‘Amsted’’), a rail equipment supplier based in Chicago, Illinois, to form Amsted Rail Faiveley LLC (‘‘ARF’’). Faiveley owns 67.5 percent of ARF and Amsted owns the remaining 32.5 percent interest in the joint venture. As part of the joint venture, all of the freight car brake system components that are manufactured by Faiveley Transport North America are marketed and sold to customers by Amsted. Amsted and Faiveley do not compete for the sale of brake system components. Critically, the joint venture allows Faiveley to bundle brake components with Amsted’s other products such as wheels and axles, thereby increasing its ability to compete for the sale of freight car brake system components. 3. Wabtec’s proposed acquisition of Faiveley would eliminate head-to-head competition in the development, manufacture, and sale of several components of freight car brake systems in the United States. The proposed acquisition likely would give Wabtec the incentive and ability to raise prices or decrease the quality of service provided to customers in the railroad freight industry. The proposed acquisition also would eliminate future competition for control valves, the most safety-critical component on a freight car. If approved, the proposed acquisition would eliminate the entry of Faiveley into this market, thus maintaining a century-old duopoly between Wabtec and its only other control valve rival, and reducing the two incumbent control valve suppliers’ incentive to compete. 4. Accordingly, the proposed acquisition likely would substantially lessen existing and future competition E:\FR\FM\07NON1.SGM 07NON1 78188 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices in the development, manufacture, and sale of freight car brake system components in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18, and should be enjoined. sradovich on DSK3GMQ082PROD with NOTICES II. Jurisdiction and Venue 5. The United States brings this action pursuant to Section 15 of the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain the defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18. 6. Defendants manufacture and sell components of freight car brake systems throughout the United States. They are engaged in a regular, continuous, and substantial flow of interstate commerce, and their activities in the development, manufacture, and sale of rail equipment have had a substantial effect upon interstate commerce. The Court has subject-matter jurisdiction over this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345. 7. Venue is proper in this District under Section 12 of the Clayton Act, 15 U.S.C. 22 and 28 U.S.C. 1391(c). Defendants have consented to venue and personal jurisdiction in the District of Columbia. III. Defendants and the Proposed Acquisition 8. Wabtec is a Delaware corporation headquartered in Wilmerding, Pennsylvania. It is one of the world’s largest providers of rail equipment and services with global sales of $3.3 billion in 2015. Wabtec makes and sells rail equipment, including braking equipment, for a variety of different end uses, including the railroad freight industry. In 2015, Wabtec’s annual worldwide sales of freight rail equipment were approximately $2 billion. 9. Faiveley Transport North America is a New York corporation headquartered in Greenville, South Carolina. Faiveley makes and sells rail equipment, including braking equipment, for a variety of end uses to customers in 24 countries, including the United States. In particular, it manufactures products used in freight rail applications. During the fiscal year beginning April 1, 2015 and ending March 31, 2016, Faiveley had global sales of approximately Ö1.1 billion, with approximately $174 million of revenue in the United States. Faiveley has manufacturing facilities in Europe, Asia, and North America, including six U.S. locations. Faiveley Transport North America is a wholly-owned subsidiary of defendant Faiveley Transport S.A., a VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 ´ ´ societe anonyme based in Gennevilliers, France. 10. On July 27, 2015, Wabtec entered into an Exclusivity Agreement with Faiveley whereby it made an irrevocable offer to acquire Faiveley, for cash and stock totaling approximately $1.8 billion, including assumed debt. The proposed acquisition would create the world’s largest rail equipment supplier with expected revenue of approximately $4.5 billion per year and a presence in every key rail market in the world. IV. Trade and Commerce A. Industry Overview 11. Rail freight transport is the use of railroads and freight trains to transport cargo. A freight train is a group of freight cars hauled by one or more locomotives on a railway. A typical freight locomotive can haul as many as 25 to 100 freight cars. 12. The railroad freight industry plays a significant role in the U.S. economy, hauling key commodities such as energy products, automobiles, construction materials, chemicals, coal, petroleum, equipment, food, metals, and minerals. The U.S. freight rail network accounts for approximately 40 percent of the distance all freight shipments of commodity goods travel in the United States. The U.S. freight rail network is one of the most developed rail networks in the world and it supports approximately $60 billion in railroad freight shipments each year. This freight network consists of 140,000 miles of trackage owned and operated by seven Class I Railroads (as identified by the U.S. Department of Transportation), 21 regional railroads, and 510 local railroads. 13. Railroads and freight car leasing companies purchase new freight cars from car builders. Car builders build the body of the freight car and are responsible for sourcing and integrating all of the components needed for the various sub-systems required to assemble a functioning freight car. The most important sub-system is the safety critical brake system. Manufacturers of brake systems and brake system components sell their components and systems to car builders for new freight cars and directly to railroads and leasing companies for aftermarket maintenance of cars. Railroads and freight car leasing companies collectively purchase and maintain approximately 1.5 million freight cars utilized throughout the U.S. freight rail network. Freight railroads in the United States spend over $20 billion annually to acquire new freight cars and maintain existing freight car fleets. Freight car maintenance is critical for PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 the safety and performance of a freight train. B. Railroad Freight Industry Regulation 14. Freight cars often must travel over multiple railroads’ trackage in order to deliver commodities throughout the United States. Traveling over multiple lines requires freight car equipment to be mechanically interoperable and meet performance standards for certain types of rail equipment. In order for the brake systems on individual freight cars to work together properly, freight car brake systems must be comprised of industryapproved components and meet critical performance standards. 15. The Federal Railroad Administration of the U.S. Department of Transportation establishes strict standards to ensure interoperability of freight cars in use within the U.S. freight rail network. These standards require that certain freight car components achieve common performance and interoperability standards. For certain freight rail equipment, including freight car brake systems, the AAR is responsible for setting technical and performance standards. The AAR is a policy- and standard-setting organization comprised of full, affiliate, and associate members. Full members include the Class I railroads. Affiliate and associate members include rail equipment suppliers and freight car owners. 16. AAR’s functions include technical and mechanical standard setting for freight rail equipment. The AAR manages fifteen technical committees comprised of select employees of full, affiliate, and associate members. These committees write technical and performance standards for components used on freight trains. They also approve products for use within the U.S. freight rail network. Thus, a component manufacturer like Wabtec or Faiveley must have AAR approval for many significant components of a freight train before its products can be used in the United States. The length and difficulty of the AAR-approval process depends on the nature and function of the train component. Brake components face some of the lengthiest and most rigorous testing and approval processes because brakes are safetycritical components that must be failsafe. The Brake Systems Committee of the AAR oversees the review and performance testing of brake equipment and it awards incremental approvals over time before a component can earn unconditional approval. 17. Freight car owners and operators view AAR approval as a critical certification. Industry participants view E:\FR\FM\07NON1.SGM 07NON1 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices V. Relevant Markets AAR approval as a high barrier to selling freight car brake systems and components in the United States. sradovich on DSK3GMQ082PROD with NOTICES C. Freight Car Brake Equipment Purchases 18. On average, there are expected to be approximately 75,000 new freight car builds per year in the United States. Demand for new cars is tied to macroeconomic conditions, including demand for the commodities that freight cars carry. In recent years demand for freight cars has ranged from approximately 63,000 to 81,000 new car builds per year. Railroads and freight car leasing companies typically issue requests for proposals to freight car builders who compete to provide complete freight cars built to specification. Freight car builders source sub-systems and components from suppliers, like Wabtec and Faiveley. Where a product must be AAR approved, car builders must source it from an AAR-approved supplier of that product. For certain components of a freight car brake system, Wabtec and Faiveley are two of the only three AARapproved suppliers. 19. New freight car procurements typically include performance specifications identified by customers. Freight car builders use these specifications to source and price particular components for the procurement. Inclusion in new car procurements also becomes a source for long-term revenues for component suppliers. Incumbent suppliers for many freight car brake system components enjoy an advantage in the aftermarket. Although components are technically interoperable, changing suppliers often introduces at least some switching costs and increased risk of failure for end-use customers. Thus, competitiveness for original equipment sales is critical. 20. Customers can purchase freight car brake equipment on a componentby-component basis. However, a large rail equipment supplier will typically offer better pricing to customers who purchase multiple freight car brake system components together as a bundle. For example, rail equipment suppliers will offer more competitive pricing to customers who purchase all the components for an entire freight car brake system rather than piecemeal purchases of certain components. Because product bundles may span multiple systems on a freight train, suppliers with broad offerings often have a competitive advantage over niche suppliers. VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 21. Defendants compete across a range of freight car brake system components, many of which require AAR approval. Each product described below constitutes a line of commerce under Section 7 of the Clayton Act, 15 U.S.C. 18, and each is a relevant product market in which competitive effects can be assessed. They are recognized in the railroad freight industry as separate product lines, they have unique characteristics and uses, they have customers that rely specifically on these products, they are distinctly priced, and they have specialized vendors. 22. Mergers and acquisitions that reduce the number of competitors in already concentrated markets are more likely to substantially lessen competition. Concentration can be measured in various ways, including by market shares and by the widely-used Herfindahl-Hirschman Index (‘‘HHI’’). See Appendix. Under the Horizontal Merger Guidelines, post-acquisition HHIs above 2500 and changes in HHI above 200 trigger a presumption that a proposed acquisition is likely to enhance market power and substantially lessen competition in a defined market. Given the high pre- and post-acquisition concentration levels in the relevant markets described below, Wabtec’s proposed acquisition of Faiveley presumptively violates Section 7 of the Clayton Act. In almost all of these markets, customers would face a duopoly after the acquisition. A. Relevant Market 1: Hand Brakes 23. A hand brake is a manual wheel located at the end of a freight car that, when turned, can engage a freight car’s brake system without using pneumatic or hydraulic pressure. It is a secondary means to prevent a freight car from moving, for example, during maintenance or when being connected to a new locomotive. 24. The market for the development, manufacture, and sale of freight car hand brakes is already concentrated. Wabtec and Faiveley together hold approximately 60 percent of this market based on the quantity of hand brakes sold. Their only significant competitor holds most of the remaining share of the hand brakes market. A fourth, marginal competitor sells a negligible quantity of hand brakes each year. Further, this competitor does not manufacture any other significant components of a freight car brake system nor is it likely to begin doing so in the foreseeable future. Thus, it is unlikely to replace the competition that would be lost as a result of the proposed acquisition. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 78189 25. In the U.S. market for the development, manufacture, and sale of freight car hand brakes, the preacquisition HHI is 3,500. The postacquisition HHI would be in excess of 5,000, with an increase in HHI in excess of 1,500. Thus, this market is highly concentrated and would become significantly more concentrated as a result of the proposed acquisition. B. Relevant Market 2: Slack Adjusters 26. A slack adjuster is a pneumatically-driven ‘‘arm’’ that applies pressure to the brake shoe (a friction material) in order to change the brake shoe’s position relative to the train’s wheel. As the brake shoe wears down, this adjustment in position maintains the brake systems’ ability to apply the correct amount of braking force by ensuring the brake shoe is applied appropriately to the wheel to achieve optimal braking capability. 27. Combined, Wabtec and Faiveley have approximately 76 percent of this market based on quantity sold. Their only significant competitor has a market share of approximately 24 percent, thereby making the proposed acquisition a virtual merger-to-duopoly in the market for the development, manufacture, and sale of slack adjusters. The proposed acquisition threatens to further concentrate this market, as evidenced by the pre- and post-merger HHIs. The post-acquisition HHI would be approximately 6,300, reflecting an increase of approximately 2,800 as a result of the acquisition. C. Relevant Market 3: Truck-Mounted Brake Assemblies 28. Freight car braking equipment is often mounted under the bogie (e.g., car), thereby serving as the foundation for the wheels. Truck-mounted brake assemblies (‘‘TMBs’’), however, are an approach to mounting the brakes on freight car designs for which bodymounted brakes are not suitable. TMBs are free standing equipment that do not require additional rigging and so are significantly lighter than their bogie counterparts. They are commonly used for special lightweight or low profile freight car designs. 29. Post-acquisition, the market for the development, manufacture, and sale of TMBs would be highly concentrated. Combined, Wabtec and Faiveley have approximately a 96 percent share of the market based on quantity sold. The post-acquisition HHI of the merged firm would be approximately 9,200, with an increase of approximately 3,600 resulting from the acquisition. E:\FR\FM\07NON1.SGM 07NON1 78190 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices D. Relevant Market 4: Empty Load Devices 30. Empty load devices are incorporated into every freight car and detect when a freight car is empty. The empty load device relays this information to the brake system control board, which is then able to reduce the amount of braking force applied to the brakes on a freight car that is empty so that it decelerates in concert with the remainder of the freight cars in tow. 31. Post acquisition, the market for the development, manufacture, and sale of empty load devices would be highly concentrated. Combined, Wabtec and Faiveley have a 60 percent share of the market based on quantity sold. The post-acquisition HHI of the merged firm would be approximately 5,100, with an increase of approximately 1,700 resulting from the acquisition. sradovich on DSK3GMQ082PROD with NOTICES E. Relevant Market 5: Brake Cylinders 32. A brake cylinder is a component of a freight car brake system that converts compressed air into mechanical force to apply the brake shoe to the wheel in order to decelerate or stop the train. 33. Post-acquisition, the market for the development, manufacture, and sale of brake cylinders would be highly concentrated. Combined, Wabtec and Faiveley have approximately a 41 percent share of the market based on quantity sold. The post-acquisition HHI of the merged firm would be approximately 5,100 with an increase of approximately 800 resulting from the acquisition. F. Relevant Market 6: Control Valve and Co-Valves 34. Modern trains rely upon a fail-safe air (or pneumatic) brake system that uses changes in air pressure to signal each freight car to release its brakes. A reduction or loss of air pressure applies the brakes using the compressed air in the air reservoir. An increase in air pressure decreases the braking force applied until it is released. The control valve, often described as the brain of a freight car’s brake system, regulates the flow of air to engage or disengage the brakes. 35. A control valve is the most highlyengineered, technologicallysophisticated component in a freight car brake system. Without it, a supplier cannot offer a complete freight car brake system. The development of a control valve also requires significant development time and financial resources. In addition, it faces one of the railroad freight industry’s lengthiest and most rigorous testing and approval processes. VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 36. The market for the development, manufacture, and sale of control valves is characterized by a century-old duopoly between Wabtec and another manufacturer. Over the past five years, Wabtec had approximately 40 percent of the U.S. control valve market and its rival had the other 60 percent of the market. 37. On June 29, 2016, Faiveley obtained conditional approval from the AAR to sell a control valve. In doing so, it disrupted the duopoly by becoming the first firm in over 25 years and only the second firm in the last 50 years to develop a control valve and make substantial progress through the industry’s formidable testing and approval process for freight car control valves. Thus, the proposed acquisition would eliminate a third potential supplier of control valves, and continue a longstanding duopoly for the foreseeable future. 38. Working closely with the control valve are its complementary valves: The dirt collector, angle cock, and vent valve (collectively, ‘‘co-valves’’). A dirt collector is a ball style cut-out-cock with a dirt chamber that is installed adjacent to the control valve. It allows for impurities in the air compressor to be filtered out to keep the air lines feeding the braking system clear of obstructions that would reduce air pressure. An angle cock is placed at the end of the brake pipe and provides a means for closing the brake pipe at the end of the freight car. A vent valve is a device on a freight car that reacts to a rapid drop in brake pipe pressure and is used to exhaust air from the brake pipe during emergency brake applications. For new freight car builds, sales of co-valves correlate with the sale of the control valve. Customers have a preference for purchasing co-valves and control valves from the same supplier, to which they return for replacement parts in the aftermarket. While Faiveley currently has insignificant sales of angle cocks, vent valves, and dirt collectors, it is an AAR-approved supplier of these products. G. Geographic Market 39. Based on customer location and the governing regulatory framework, the United States is the relevant geographic market for the development, manufacture, and sale of freight brake components. Wabtec and Faiveley compete with each other for customers located throughout the United States. When a geographic market is defined based on the location of customers, competitors in the market are firms that sell to customers in the specified region even though some suppliers that sell PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 into the relevant market may be located outside the geographic market. In addition, before suppliers can sell components of freight car brake systems in the United States, they must first get AAR approval. The AAR’s regulatory authority requires products be certified for interoperability within the U.S. freight rail network. Because these products are certified for use and sale anywhere in the United States, the regulatory framework determines which firms can supply the U.S. customer base, which supports a United States geographic market. Furthermore, suppliers of freight car brake systems and components typically deliver their products and services to customers’ locations and are able to price discriminate based on those locations. 40. In addition, a small but significant increase in price of each of the foregoing components of a freight car brake system sold into the United States would not cause a sufficient number of U.S. customers to turn to providers of freight brake components sold into other countries because those products lack AAR approval and interoperability with U.S. freight rail networks. Accordingly, the United States is a relevant geographic market within the meaning of Section 7 of the Clayton Act. VI. Anticompetitive Effects 41. Wabtec and Faiveley presently compete in the development, manufacture, and sale of many components of a freight car brake system, including hand brakes, slack adjusters, empty load devices, TMBs and brake cylinders. The defendants’ combined shares in each of these markets range from approximately 41 to 96 percent. Therefore, the unilateral competitive effects of the proposed acquisition are presumptively harmful in these product markets under the Horizontal Merger Guidelines. The proposed acquisition likely will result in unilateral effects that substantially lessen competition in the markets for hand brakes, load detection devices, slack adjusters, TMBs, and brake cylinders, respectively. 42. In each of the foregoing relevant markets, Wabtec and Faiveley presently compete against each other and only one other large competitor. Prices and other terms of trade are usually determined by negotiations between suppliers and customers. Products are not highly differentiated by function or performance, and price is the primary customer consideration given that performance is presumed after approval by the industry’s standard-setting body, the AAR. E:\FR\FM\07NON1.SGM 07NON1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices 43. A merger between two competing sellers reduces the ability of buyers to negotiate better contract terms, including price, by leveraging competing offers. The loss of customer negotiating power can significantly enhance the ability and incentive of the merged entity to offer less competitive terms. Customers likely derive significant benefits from having Faiveley in the market today, as reflected by its substantial market shares in the relevant freight brake components identified above. The resulting loss of a competitor and increased concentration of market share indicate that the acquisition likely will result in significant harm from expected price increases and decreases in quality of service. 44. When the proposed acquisition was announced, Wabtec and a second manufacturer were the only AARapproved suppliers of control valves, a duopolistic market they had shared for over a century. 45. As the second-largest railway brake manufacturer in the world, Faiveley was uniquely positioned to enter the control valve market. Faiveley had developed a control valve prototype that it intended to shepherd through the AAR’s control valve testing and approval process. If successful, it would have become a third control valve supplier. But for the merger, Faiveley likely would have entered the control valve market, thereby invigorating competition between Wabtec and its only competitor in the control valve market. The entry of a third supplier of control valves likely would increase competition and allow customers to negotiate better prices and terms. 46. Faiveley’s entry into the control valve market would pose an immediate threat to the incumbent suppliers, forcing them to compete aggressively or risk losing a sale to Faiveley. Faiveley’s customers anticipate it would offer price competition in order to gain quick acceptance of its control valve. As a result, Faiveley likely would have had a substantial impact on pricing, service and other commercial terms offered by the incumbent suppliers, even with a small initial share of actual sales. Therefore, the proposed acquisition is likely to result in anticompetitive unilateral effects in the market for control valves. VII. Entry 47. Given the substantial time required to develop and qualify a component of a freight car brake system, timely and sufficient entry by other competitors into any of the relevant markets is unlikely to mitigate the VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 harmful effects of the proposed acquisition. 48. The likelihood of another potential entrant in the control valve market is even more remote given the historical dearth of meaningful attempts to enter this market, as well as the substantial time and cost associated with entry into the control valve market. VIII. Violation Alleged 49. The acquisition of Faiveley by Wabtec likely would substantially lessen competition in each of the relevant markets in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. 50. Unless enjoined, the acquisition likely would have the following anticompetitive effects, among others: (a) Actual and potential competition between Wabtec and Faiveley in the relevant markets would be eliminated; (b) competition generally in the relevant markets would be eliminated; and (c) prices and commercial terms for the relevant products would be less favorable, and quality and service relating to these products likely would decline. IX. Request for Relief 51. The United States requests that this Court: (a) Adjudge and decree Wabtec’s proposed acquisition of Faiveley to be unlawful and in violation of Section 7 of the Clayton Act, 15 U.S.C. 18; (b) preliminarily and permanently enjoin and restrain defendants and all persons acting on their behalf from consummating Wabtec’s proposed acquisition or from entering into or carrying out any contract, agreement, plan, or understanding, the effect of which would be to combine Faiveley with the operations of Wabtec; (c) award the United States its costs of this action; and (d) award the United States such other relief as the Court deems just and proper. Dated: October 26, 2016 Respectfully submitted, FOR PLAINTIFF UNITED STATES: Renata B. Hesse (DC Bar #466107) Acting Assistant Attorney General Antitrust Division Sonia K. Pfaffenroth Deputy Assistant Attorney General Antitrust Division Patricia A. Brink Director of Civil Enforcement Antitrust Division Maribeth Petrizzi (DC Bar #435204) Chief, Litigation II Section Antitrust Division Stephanie A. Fleming PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 78191 Assistant Chief, Litigation II Section Antitrust Division Doha Mekki* James K. Foster, Jr. Erin C. Grace Daniel J. Monahan Suzanne Morris Trial Attorneys United States Department of Justice Antitrust Division, Litigation II Section 450 Fifth Street NW., Suite 8700 Washington, DC 20530 Telephone: (202) 598–8023 Facsimile: (202) 514–9033 doha.mekki@usdoj.gov *LEAD ATTORNEY TO BE NOTICED Appendix Herfindahl-Hirschman Index The Herfindahl-Hirschman Index (‘‘HHI’’) is a commonly accepted measure of market concentration. The HHI is calculated by squaring the market share of each firm competing in the relevant market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 = 2,600). The HHI takes into account the relative size distribution of the firms in a market. It approaches zero when a market is occupied by a large number of firms of relatively equal size, and reaches its maximum of 10,000 points when a market is controlled by a single firm. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases. United States District Court for the District of Columbia United States Of America, Plaintiff, v. Westinghouse Air Brake Technologies Corp., Faiveley Transport S.A., and Faiveley Transport North America, Defendants. Case No.: 1:16–cv–02147 Judge: Tanya S. Chutkan Filed: 10/26/2016 Competitive Impact Statement Plaintiff United States of America (‘‘United States’’), pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. 16(b)-(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding. I. Nature and Purpose of the Proceeding On July 27, 2015, Defendant Westinghouse Air Brake Technologies Corp. (‘‘Wabtec’’) and Defendants Faiveley Transport S.A. and Faiveley Transport North America (‘‘Faiveley’’) entered into an Exclusivity Agreement pursuant to which Wabtec made an irrevocable offer to acquire Faiveley for cash and stock totaling approximately $1.8 billion, including assumed debt. The United States filed a civil antitrust E:\FR\FM\07NON1.SGM 07NON1 78192 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices Complaint on October 26, 2016, seeking to enjoin the proposed acquisition. The Complaint alleges that the acquisition likely would lessen competition substantially for the development, manufacture, and sale of various railroad freight car brake components including hand brakes, slack adjusters, truck-mounted brake assemblies, empty load devices, brake cylinders, and brake control valves in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. This loss of competition likely would result in significant harm from expected price increases and decreases in quality of service by the incumbent suppliers in the markets for those products. At the same time the Complaint was filed, the United States filed a Hold Separate Stipulation and Order and a proposed Final Judgment, which are designed to eliminate the anticompetitive effects of the acquisition. Under the proposed Final Judgment, which is explained more fully below, Defendants are required to divest Faiveley’s entire U.S. freight car brakes business, including all assets relating to Faiveley’s freight car brake control valve development project (known as the FTEN) to a named buyer, Amsted Rail Company, Inc. (‘‘Amsted’’). These assets collectively are referred to as the ‘‘Divestiture Assets.’’ Under the terms of the Hold Separate Stipulation and Order, Defendants will take certain steps to ensure that the Divesture Assets are operated as a competitively independent, economically viable and ongoing business concern, that the Divestiture Assets will remain independent and uninfluenced by the consummation of the acquisition; and that competition is maintained during the pendency of the ordered divestiture. The United States and Defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Court would retain jurisdiction to construe, modify, or enforce the provisions of the proposed Final Judgment and to punish violations thereof. sradovich on DSK3GMQ082PROD with NOTICES II. Description of the Events Giving Rise to the Alleged Violation A. The Defendants and the Proposed Transaction Wabtec is a Delaware corporation headquartered in Wilmerding, Pennsylvania. It is one of the world’s largest providers of rail equipment and services with global sales of $3.3 billion in 2015. In the United States, Wabtec VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 makes and sells rail equipment, including braking equipment, for a variety of different end-uses, including the railroad freight industry. Wabtec’s annual global sales of freight rail equipment totaled approximately $2 billion in 2015. ´ ´ Faiveley Transport S.A. is a societe anonyme based in Gennevilliers, France. Faiveley makes and sells rail equipment, including braking equipment, for a variety of end uses to customers in 24 countries, including the United States. In particular, it manufactures products used in freight rail applications. During the fiscal year beginning April 1, 2015 and ending March 31, 2016, Faiveley had global sales of approximately Ö1.1 billion, with approximately $174 million of revenue in the United States. Faiveley has manufacturing facilities in Europe, Asia, and North America, including six U.S. locations. Faiveley Transport North America is a wholly-owned subsidiary of Faiveley Transport S.A. It is a New York Corporation headquartered in Greenville, South Carolina. It is the sole business unit of Faiveley that is responsible for the development, manufacture, and sale of freight car brake components in the United States. In 2010, Faiveley entered into a joint venture with Amsted, a rail equipment supplier based in Chicago, Illinois, to form Amsted Rail Faiveley, LLC (‘‘ARF’’). Faiveley owns 67.5 percent of ARF and Amsted owns the remaining 32.5 percent. As part of the joint venture, all of the freight car brake components that are manufactured by Faiveley currently are marketed and sold to customers by Amsted. Critically, the joint venture allows Faiveley to bundle brake components with Amsted’s other products such as wheels and axles, thereby increasing its ability to compete for the sale of freight car brake components against Wabtec. On July 27, 2015, Wabtec and Faiveley entered into an Exclusivity Agreement whereby Wabtec would acquire Faiveley for cash and stock totaling approximately $1.8 billion, including assumed debt. The proposed acquisition would create the world’s largest rail equipment supplier with expected revenue of approximately $4.5 billion per year and a presence in every key rail market in the world. As part of that acquisition, Wabtec proposed to acquire all of Faiveley’s freight car brakes business in the United States, including its interest in the ARF joint venture and Faiveley’s FTEN freight car brake control valve now being developed. This acquisition is the subject of the Complaint and proposed PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 Final Judgment filed by the United States on October 26, 2016. B. Background on Freight Car Brake Equipment Purchases Rail freight transport is the use of railroads and freight trains to transport cargo. The railroad freight industry plays a significant role in the U.S. economy, hauling key commodities such as energy products, automobiles, construction materials, chemicals, coal, petroleum, equipment, food, metals, and minerals. The U.S. freight rail network accounts for approximately 40 percent of the distance all freight shipments of commodity goods travel in the United States. The U.S. freight rail network is one of the most developed rail networks in the world and it supports approximately $60 billion in railroad freight shipments each year. This freight network consists of 140,000 miles of trackage owned and operated by seven Class I Railroads, 21 regional railroads, and 510 local railroads. In order to deliver commodities throughout the United States, freight cars often must travel over multiple railroads’ trackage. Traveling over multiple lines requires freight car equipment to be mechanically interoperable and meet common performance standards for certain types of rail equipment. In order for the brake systems on individual freight cars to work together properly, freight car brake systems must be comprised of industryapproved components and meet critical performance standards. For certain freight rail equipment, including freight car brake systems, the Association of American Railroads (‘‘AAR’’) is responsible for setting technical and performance standards. The AAR is a policy- and standard-setting organization comprised of full, affiliate, and associate members. Full members include the Class I railroads. Affiliate and associate members include rail equipment suppliers and freight car owners. AAR’s functions include technical and mechanical standard setting for freight rail equipment. The AAR manages fifteen technical committees that write technical and performance standards for all components used on freight trains and approve products for use. Thus, a component manufacturer must have AAR approval for brake components before they can be used. Brake components face some of the lengthiest and most rigorous testing and approval processes because brakes are safety-critical components that must be fail-safe. The Brake Systems Committee of the AAR oversees the review and performance tests of braking equipment E:\FR\FM\07NON1.SGM 07NON1 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES and it awards incremental approvals over time before a component can earn unconditional approval. Freight car owners and operators view AAR approval as a critical certification. Industry participants view AAR approval as a high barrier to selling freight car brake systems and components in the United States. Railroads and freight car leasing companies collectively spend over $20 billion annually to obtain new freight cars and to maintain approximately 1.5 million freight cars utilized throughout the United States. On average, there are expected to be approximately 75,000 new freight car builds per year in the United States, and demand for new cars is tied to macroeconomic conditions, including demand for the commodities these freight cars carry. In recent years, demand for freight cars has ranged from approximately 63,000 to 81,000 new car builds. Railroads and freight car leasing companies typically issue requests for proposals to freight car builders who compete to provide complete freight cars built to specification. Freight car builders source sub-systems and components from suppliers like, Wabtec and Faiveley. Where a product must be AAR approved, car builders must source it from an AAR-approved supplier of that product. For certain components of a freight car brake system, Wabtec and Faiveley are two of the only three AARapproved suppliers of the product. New freight car procurements typically include performance specifications identified by customers. Freight car builders use these specifications to source and price particular components for the procurement. Inclusion in new car procurements also becomes a source for long-term revenues for component suppliers. Incumbent suppliers for many freight car brake system components enjoy an advantage in the aftermarket. Although components are technically interoperable, changing suppliers often introduces switching costs and increased risk of failure for end-use customers. Thus, competitiveness for original equipment sales is critical. C. Relevant Markets Affected by the Proposed Acquisition Defendants compete across a range of freight car brake system components that require AAR approval. The Complaint alleges that each of these brake system components is a relevant product market in which competitive effects can be assessed. The different components are recognized in the railroad freight industry as separate product lines, they have unique VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 characteristics and uses, they have customers that rely specifically on these products, they are distinctly priced, and they have specialized vendors. Competition would likely be lessened with respect to those components as a result of the proposed acquisition because there would be one fewer substantial equipment manufacturer in each of these highly concentrated markets. For purchasers of components of freight car brake components, Wabtec and Faiveley are two of the top three suppliers, with combined market shares of approximately 41 to 96 percent for the products in which they compete. Faiveley is expected to be an even stronger competitor after full commercialization of the FTEN. 1. U.S. Markets for Hand Brakes, Slack Adjusters, Truck-Mounted Brake Assemblies, Empty Load Devices, and Brake Cylinders The Complaint alleges likely harm in five distinct product markets for freight car brake components that Faiveley currently sells under and through the ARF joint venture: Hand brakes, slack adjusters, truck-mounted brake assemblies (‘‘TMBs’’), empty load devices, and brake cylinders. A hand brake is a manual wheel located at the end of a freight car that, when turned, can engage a freight car’s brakes system without using pneumatic or hydraulic pressure. It is a secondary means to prevent a freight car from moving, for example, during maintenance or when being connected to a new locomotive. A slack adjuster is a pneumatically-driven ‘‘arm’’ that applies pressure to the brake shoe (a friction material) in order to change the brake shoe’s position relative to the train’s wheel. As the brake shoe wears down, this adjustment in position maintains the brake systems’ ability to apply the correct amount of braking force by ensuring the brake shoe is applied appropriately to the wheel to achieve optimal braking capability. TMBs are an approach to mounting brakes on freight car designs for which body-mounted brakes are not suitable. TMBs are free-standing equipment that do not require additional rigging and so are significantly lighter than bodymounted brakes. They are commonly used for special lightweight or low profile freight car designs. Empty load devices are incorporated into every freight car and detect when a freight car is empty. The empty load device relays this information to the brake system control board, which is then able to reduce the amount of braking force applied to the brakes on a freight car that is empty so that it decelerates in concert with the remainder of the freight PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 78193 cars in tow. A brake cylinder is a component of a freight car brake system that converts compressed air into mechanical force to apply the brake shoe to the wheel in order to stop or slow the train. 2. U.S. Market for Freight Brake Control Valves and Co-Valves The Complaint also alleges likely harm in a distinct product market for freight car brake control valves and the associated co-valves that are typically sold with them. The control valve, often described as the brain of a freight car’s brake system, regulates the flow of air to engage or disengage the brakes. A control valve is the most highlyengineered, technologicallysophisticated component in a freight car brake system. Without it, a supplier cannot offer a complete freight car brake system. The development of a control valve also requires significant development time and financial resources. In addition, it faces one of the railroad freight industry’s lengthiest and most rigorous testing and approval processes. This results in extremely high entry barriers for this market. Working closely with the control valve are its complementary valves: The dirt collector, angle cock, and vent valve (collectively, ‘‘co-valves’’). A dirt collector is a ball style cut-out-cock with a dirt chamber that is installed adjacent to the control valve. It allows for impurities in the air compressor to be filtered out to keep the air lines feeding the braking system clear of obstructions that would reduce air pressure. An angle cock is placed at the end of the brake pipe and provides a means for closing the brake pipe at the end of the freight car. A vent valve is a device on a freight car that reacts to a rapid drop in brake pipe pressure and is used to exhaust air from the brake pipe during emergency brake applications. These covalves are an essential part of the development, manufacture, and sale of control valves, and for new freight car builds, sales of co-valves correlate with the sale of the control valve. The market for the development, manufacture, and sale of control valves is characterized by a century-old duopoly between Wabtec and another manufacturer. Over the past five years, Wabtec had approximately 40 percent of the U.S. control valve market and its rival had the other 60 percent of the market. On June 29, 2016, after a lengthy and expensive development process, Faiveley obtained conditional approval from the AAR to sell its control valve. In doing so, it become the first firm in over 25 years and only the second in the E:\FR\FM\07NON1.SGM 07NON1 78194 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices last 50 years to develop a control valve and make substantial progress through the industry’s formidable testing and approval process. Faiveley has built the first 200 units and satisfactorily completed all AAR laboratory tests. It projects sales of a few thousand units over the next few years as it works with railroads to continue to test and demonstrate the FTEN in various functional environments. Full commercialization and unconditional AAR approval is expected within seven years. D. Geographic Market As alleged in the Complaint, the United States is the relevant geographic market for the development, manufacture, and sale of freight brake components. Wabtec and Faiveley compete with each other for customers located throughout the United States. When a geographic market is defined based on the location of customers, competitors in the market are firms that sell to customers in the specified region, even though some suppliers that sell into the relevant market may be located outside the geographic market. Before suppliers can sell components of freight car brake systems in the United States, they must receive AAR approval. The AAR’s regulatory authority requires products be certified for interoperability within the U.S. freight rail network. Because these products are certified for use and sale anywhere in the United States, the regulatory framework determines which firms can supply the U.S. customer base, which supports a United States geographic market. Furthermore, suppliers of freight car brake systems and components typically deliver their products and services to customers’ locations and are able to price discriminate based on customers’ locations. In addition, a small but significant increase in price of each of the foregoing components of a freight car brake system sold into the United States would not cause a sufficient number of U.S. customers to turn to providers of freight brake components sold into other countries because those products lack AAR approval and interoperability with U.S. freight rail networks. sradovich on DSK3GMQ082PROD with NOTICES E. Anticompetitive Effects 1. Freight Car Hand Brakes, Slack Adjusters, Truck-Mounted Brake Assemblies, Empty Load Devices, and Brake Cylinders Wabtec and Faiveley presently compete vigorously in the development, manufacture, and sale of hand brakes, slack adjusters, TMBs, empty load VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 devices, and brake cylinders, and because these markets are highly concentrated and subject to high entry barriers, unilateral anticompetitive effects would be likely to result from the acquisition. In each of the foregoing relevant markets, Wabtec and Faiveley presently compete against each other and another large competitor in a bargaining format where products are not highly differentiated by function or performance and price is the primary customer consideration, given that performance is presumed after approval by the industry’s standard-setting body, the AAR. Given the nature and the extent of this competition, a merger between two competing sellers would remove a buyer’s ability to negotiate these sellers against each other. The loss of this bargaining competition can significantly enhance the ability and incentive of the merged entity to obtain a result more favorable to it and less favorable to the buyer than the merging firms would have obtained separately, absent the merger. As its substantial market shares attest, customers derive significant benefits from having Faiveley in the market today. The resulting loss of a competitor and increased concentration of market share indicate that the acquisition likely will result in significant harm from expected price increases and decreases in quality of service if the proposed acquisition is consummated. 2. Freight Car Control Valves and CoValves Wabtec and a second manufacturer are now the only unconditionally approved suppliers of freight car brake control valves. As the second-largest railway brake manufacturer in the world, Faiveley was uniquely positioned to enter this market because of both its general competency and the substantial progress it has already made in developing the product. Absent the merger it would have become the only other freight car brake control valve supplier. The proposed acquisition would eliminate future competition for the development, manufacture, and sale of control valves by eliminating Faiveley’s entry into this market. Faiveley’s entry into the control valve market would have posed an immediate threat to the incumbent suppliers’ by forcing them to compete aggressively or risk losing a sale to Faiveley. This market is also characterized by bargaining and price competition and involves the same competitive dynamics described above. Faiveley’s customers would have enjoyed enhanced price competition immediately as Faiveley strove to gain PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 quick acceptance of its control valve. Over the long term, the existence of Faiveley as a third supplier would have continued to enhance competition. Without the required divestiture of assets, Wabtec’s acquisition of Faiveley would have eliminated important headto-head competition in the development, manufacture, and sale of freight car brake components and likely would have given Wabtec the incentive and ability to raise prices and decrease the quality of service provided to the railroad freight car industry. Absent the required divestiture of assets, the acquisition also would have eliminated a third potential supplier of control valves, thereby freezing in place a longstanding duopoly in that market. F. Barriers to Entry Given the substantial time required to develop and qualify a component of a freight car brake system, timely and sufficient entry by other competitors into any of the relevant markets, is unlikely to mitigate the harmful effects of the proposed acquisition. The likelihood of another potential entrant in the control valve market is particularly remote given the historical dearth of meaningful attempts to enter this market, as well as the substantial time and cost associated with entry into the control valve market. III. Explanation of the Proposed Final Judgment The divestitures required by the proposed Final Judgment will eliminate the anticompetitive effects of the acquisition in the relevant markets by establishing a new, independent, and economically viable competitor in the development, manufacture, and sale of freight car brake components by quickly transferring full ownership of the ARF joint venture to Amsted. It is also expected to eliminate the anticompetitive effects of the acquisition from the loss of competition in the development, manufacture, and sale of brake control valves by transferring to Amsted all assets relating to the FTEN control valve project, including the FTEN valve itself, as well as dirt collectors, angle cocks, and vent valves. Paragraph II(G) of the proposed Final Judgment defines the Divestiture Assets to include all assets owned or under the control of Faiveley at the current ARF facility in Greenville, South Carolina, and include Faiveley’s full and complete interest, rights, and property in ARF and the FTEN control valve. The Divestiture Assets include all tangible assets relating to ARF and the FTEN control valve, including, but not limited E:\FR\FM\07NON1.SGM 07NON1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices to, research and development activities; all manufacturing equipment, tooling and fixed assets, including, at the option of the Acquirer, the braking simulation testing equipment known as the ‘‘whale’’ located at Greenville, South Carolina, personal property, inventory, office furniture, materials, supplies, and other tangible property; all licenses, permits and authorizations issued by any governmental organization; all contracts, teaming arrangements, agreements, leases, commitments, certifications, and understandings, including supply agreements; all customer lists, contracts, accounts, and credit records; all repair and performance records, and all other records. The Divestiture Assets also include all intangible assets relating to ARF and the FTEN control valve, including, but not limited to, all patents, licenses and sublicenses, intellectual property, copyrights, trademarks, trade names, service marks, service names, technical information, computer software and related documentation, know-how, trade secrets, drawings, blueprints, designs, design protocols, specifications for materials, specifications for parts and devices, safety procedures for the handling of materials and substances, quality assurance and control procedures, design tools and simulation capability, all manuals and technical information Faiveley provides to its own employees, customers, suppliers, agents or licensees, and all research data, including, but not limited to, designs of experiments, and the results of successful and unsuccessful designs and experiments. Paragraph IV(A) of the proposed Final Judgment requires Defendants, within twenty (20) calendar days after the signing of the Hold Separate Stipulation and Order in this matter to divest the Divestiture Assets in a manner consistent with the Final Judgment to Amsted or an Acquirer acceptable to the United States, in its sole discretion. The Divestiture Assets must be divested in such a way as to satisfy the United States in its sole discretion that they assets can and will be operated by the purchaser as a viable, ongoing business that can compete effectively in the relevant market. Defendants must take all reasonable steps necessary to accomplish the divestiture quickly and shall cooperate with the named acquirer (Amsted) or any other prospective purchaser. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 In the event that Defendants do not accomplish the divestiture within the period prescribed in the proposed Final Judgment, Paragraph V(A) of the proposed Final Judgment provides that the Court will appoint a trustee selected by the United States to effect the divestiture. If a trustee is appointed, the proposed Final Judgment provides that Wabtec will pay all costs and expenses of the trustee. The trustee’s commission will be structured so as to provide an incentive for the trustee based on the price obtained and the speed with which the divestiture is accomplished. After his or her appointment becomes effective, the trustee will file monthly reports with the Court and the United States setting forth his or her efforts to accomplish the divestiture. At the end of six months, if the divestiture has not been accomplished, the trustee and the United States will make recommendations to the Court, which shall enter such orders as appropriate, in order to carry out the purpose of the trust, including extending the trust or the term of the trustee’s appointment. Paragraph IV(I) of the proposed Final Judgment provides that final approval of the divestiture, including the identity of the Acquirer, is left to the sole discretion of the United States to ensure the continued independence and viability of the Divestiture Assets in the relevant markets. In this matter, Amsted has been identified as the expected purchaser of the Divestiture Assets and is currently in final negotiations with Defendants for a purchase agreement. After a thorough examination of Amsted, its plans for the Divestiture Assets and the proposed sale agreements, as well as consideration of feedback from customers, the United States approved Amsted as the buyer. Amsted is a strong competitor in other freight car equipment such as bogies, wheels, and axles. It is uniquely positioned as the current face of Faiveley brake components to the marketplace (through ARF) and has been the expected conduit through which FTEN was to be marketed by Faiveley absent the merger. Amsted’s intimate familiarity with the products, the personnel, the AAR approval process, and the relevant customers should ensure that in its hands the Divestiture Assets will provide meaningful competition. Under Paragraph IV(I) of the proposed Final Judgment, in the event Amsted is unable to acquire the Divestiture Assets, another Acquirer may purchase the Divestiture Assets, subject to approval by the Department in its sole discretion. The divestiture of assets must be accomplished as a single divestiture of PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 78195 all the Divestiture Assets to a single Acquirer. The Divestiture Assets may not be sold piecemeal. This is to protect the integrity of the Divestiture Assets as an ongoing, viable business and to enable the existing business to continue as a vigorous competitor in the future. Section XI of the proposed Final Judgment requires Wabtec to provide notification to the Antitrust Division of certain proposed acquisitions not otherwise subject to filing under the Hart-Scott Rodino Act, 15 U.S.C. 18a (the ‘‘HSR Act’’), and in the same format as, and per the instructions relating to the notification required under that statute. The notification requirement applies in the case of any direct or indirect acquisitions of any assets of or interest in any entity engaged in certain activities relating to freight car brake systems or components in the United States. Section XI further provides for waiting periods and opportunities for the United States to obtain additional information similar to the provisions of the HSR Act before such acquisitions can be consummated. IV. Remedies Available to Potential Private Litigants Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys’ fees. Entry of the proposed Final Judgment will neither impair nor assist the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against Defendants. V. Procedures Available for Modification of the Proposed Final Judgment The United States and Defendants have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court’s determination that the proposed Final Judgment is in the public interest. The APPA provides a period of at least sixty (60) days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within sixty (60) days of the date of publication of this E:\FR\FM\07NON1.SGM 07NON1 78196 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES Competitive Impact Statement in the Federal Register, or the last date of publication in a newspaper of the summary of this Competitive Impact Statement, whichever is later. All comments received during this period will be considered by the United States Department of Justice, which remains free to withdraw its consent to the proposed Final Judgment at any time prior to the Court’s entry of judgment. The comments and the response of the United States will be filed with the Court. In addition, comments will be posted on the U.S. Department of Justice, Antitrust Division’s Internet Web site and, under certain circumstances, published in the Federal Register. Written comments should be submitted to: Maribeth Petrizzi, Chief, Litigation II Section, 450 Fifth Street NW., Suite 8700, Antitrust Division, United States Department of Justice, Washington, DC 20530. The proposed Final Judgment provides that the Court retains jurisdiction over this action, and the parties may apply to the Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment. VI. Alternatives to the Proposed Final Judgment The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against Defendants. The United States could have continued the litigation and sought preliminary and permanent injunctions against Wabtec’s acquisition of Faiveley. The United States is satisfied, however, that the divestiture of assets described in the proposed Final Judgment will preserve competition for the development, manufacture, and sale of certain components of a freight car brake system, including hand brakes, slack adjusters, truck-mounted brake assemblies, empty load devices, brake cylinders, and control valves, in the relevant markets identified by the United States. Thus, the proposed Final Judgment would achieve all or substantially all of the relief the United States would have obtained through litigation, but avoids the time, expense, and uncertainty of a full trial on the merits. VII. Standard of Review Under the APPA for the Proposed Final Judgment The APPA requires that proposed consent judgments in antitrust cases brought by the United States be subject to a sixty-day comment period, after which the court shall determine VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 whether entry of the proposed Final Judgment is ‘‘in the public interest.’’ 15 U.S.C. 16(e)(1). In making that determination, the court, in accordance with the statute as amended in 2004, is required to consider: (A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and (B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial. Id. at § 16(e)(1)(A) & (B). In considering these statutory factors, the court’s inquiry is necessarily a limited one as the government is entitled to ‘‘broad discretion to settle with the defendant within the reaches of the public interest.’’ United States v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC Commc’ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public interest standard under the Tunney Act); United States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting that the court’s ‘‘inquiry is limited’’ because the government has ‘‘broad discretion’’ to determine the adequacy of the relief secured through a settlement); United States v. InBev N.V./ S.A., No. 08–1965 (JR), 2009–2 Trade Cas. (CCH) ¶ 76,736, 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that the court’s review of a consent judgment is limited and only inquires ‘‘into whether the government’s determination that the proposed remedies will cure the antitrust violations alleged in the complaint was reasonable, and whether the mechanism to enforce the final judgment are clear and manageable.’’).1 As the United States Court of Appeals for the District of Columbia Circuit has held, a court conducting inquiry under the APPA may consider, among other things, the relationship between the 1 The 2004 amendments substituted ‘‘shall’’ for ‘‘may’’ in directing relevant factors for court to consider and amended the list of factors to focus on competitive considerations and to address potentially ambiguous judgment terms. Compare 15 U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc’ns, 489 F. Supp. 2d at 11 (concluding that the 2004 amendments ‘‘effected minimal changes’’ to Tunney Act review). PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 remedy secured and the specific allegations set forth in the government’s complaint, whether the decree is sufficiently clear, whether enforcement mechanisms are sufficient, and whether the decree may positively harm third parties. See Microsoft, 56 F.3d at 1458– 62. With respect to the adequacy of the relief secured by the decree, a court may not ‘‘engage in an unrestricted evaluation of what relief would best serve the public.’’ United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460–62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that: [t]he balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General. The court’s role in protecting the public interest is one of insuring that the government has not breached its duty to the public in consenting to the decree. The court is required to determine not whether a particular decree is the one that will best serve society, but whether the settlement is ‘‘within the reaches of the public interest.’’ More elaborate requirements might undermine the effectiveness of antitrust enforcement by consent decree. Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).2 In determining whether a proposed settlement is in the public interest, a district court ‘‘must accord deference to the government’s predictions about the efficacy of its remedies, and may not require that the remedies perfectly match the alleged violations.’’ SBC Commc’ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 8 F. Supp. 3d at 75 (noting that a court should not reject the proposed remedies because it believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the need for courts to be ‘‘deferential to the government’s predictions as to the effect of the proposed remedies’’); United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant due respect to the government’s prediction as to the effect of proposed remedies, its perception of 2 Cf. BNS, 858 F.2d at 464 (holding that the court’s ‘‘ultimate authority under the [APPA] is limited to approving or disapproving the consent decree’’); United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the court is constrained to ‘‘look at the overall picture not hypercritically, nor with a microscope, but with an artist’s reducing glass’’). See generally Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the remedies [obtained in the decree are] so inconsonant with the allegations charged as to fall outside of the ‘reaches of the public interest’ ’’). E:\FR\FM\07NON1.SGM 07NON1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices the market structure, and its views of the nature of the case). Courts have greater flexibility in approving proposed consent decrees than in crafting their own decrees following a finding of liability in a litigated matter. ‘‘[A] proposed decree must be approved even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is ‘within the reaches of public interest.’ ’’ United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff’d sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the government to grant concessions in the negotiation process for settlements (citing Microsoft, 56 F.3d at 1461); United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even though the court would have imposed a greater remedy). To meet this standard, the United States ‘‘need only provide a factual basis for concluding that the settlements are reasonably adequate remedies for the alleged harms.’’ SBC Commc’ns, 489 F. Supp. 2d at 17. Moreover, the court’s role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its Complaint, and does not authorize the court to ‘‘construct [its] own hypothetical case and then evaluate the decree against that case.’’ Microsoft, 56 F.3d at 1459; see also U.S. Airways, 38 F. Supp 3d at 75 (noting that the court must simply determine whether there is a factual foundation for the government’s decisions such that its conclusions regarding the proposed settlements are reasonable; InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (concluding that ‘‘the ‘public interest’ is not to be measured by comparing the violations alleged in the complaint against those the court believes could have, or even should have, been alleged’’). Because the ‘‘court’s authority to review the decree depends entirely on the government’s exercising its prosecutorial discretion by bringing a case in the first place,’’ it follows that ‘‘the court is only authorized to review the decree itself,’’ and not to ‘‘effectively redraft the complaint’’ to inquire into other matters that the United States did not pursue. Microsoft, 56 F.3d at 1459– 60. As this Court confirmed in SBC Communications, courts ‘‘cannot look beyond the complaint in making the public interest determination unless the complaint is drafted so narrowly as to VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 make a mockery of judicial power.’’ 489 F. Supp. 2d at 15. In its 2004 amendments, Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement, adding the unambiguous instruction that ‘‘[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.’’ 15 U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76 (indicating that a court is not required to hold an evidentiary hearing or to permit intervenors as part of its review under the Tunney Act). This language codified what Congress intended when it enacted the Tunney Act in 1974, as the author of this legislation, Senator Tunney explained: ‘‘The court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.’’ 119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). Rather, the procedure for the public interest determination is left to the discretion of the court, with the recognition that the court’s ‘‘scope of review remains sharply proscribed by precedent and the nature of Tunney Act proceedings.’’ SBC Commc’ns, 489 F. Supp. 2d at 11.3 A court can make its public interest determination based on the competitive impact statement and response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 76. 78197 United States Department of Justice Antitrust Division, Litigation II Section 450 Fifth Street NW., Suite 8700 Washington, DC 20530 Telephone: (202) 598–8023 Facsimile: (202) 514–9033 Doha.mekki@usdoj.gov United States District Court for the District of Columbia United States of America, Plaintiff, v. Westinghouse Air Brake Technologies Corp., Faiveley Transport S.A., and Faiveley Transport North America, Defendants. Case No.: 1:16–cv–02147 Judge: Tanya S. Chutkan Filed: 10/26/2016 Proposed Final Judgment Whereas, Plaintiff, United States of America, filed its Complaint on October 26, 2016, the United States and defendants, Westinghouse Air Brake Technologies Corp., Faiveley Transport S.A., and Faiveley Transport North America, by their respective attorneys, have consented to the entry of this Final Judgment without trial or adjudication of any issue of fact or law, and without this Final Judgment constituting any evidence against or admission by any party regarding any issue of fact or law; And whereas, defendants agree to be bound by the provisions of this Final Judgment pending its approval by the Court; And whereas, the essence of this Final Judgment is the prompt and certain divestiture of certain rights and assets by the defendants to assure that competition is not substantially lessened; VIII. Determinative Documents And whereas, the United States There are no determinative materials requires defendants to make a certain or documents within the meaning of the divestiture for the purpose of remedying APPA that were considered by the the loss of competition alleged in the United States in formulating the Complaint; proposed Final Judgment. And whereas, defendants have represented to the United States that the Dated: October 26, 2016. divestiture required below can and will Respectfully submitted, /s/ lllllllllllllllllll be made and that defendants will later DOHA MEKKI raise no claim of hardship or difficulty as grounds for asking the Court to 3 See also United States v. Enova Corp., 107 F. modify any of the divestiture provisions Supp. 2d 10, 17 (D.D.C. 2000) (noting that the contained below; ‘‘Tunney Act expressly allows the court to make its Now therefore, before any testimony public interest determination on the basis of the competitive impact statement and response to is taken, without trial or adjudication of comments alone’’); United States v. Mid-Am. any issue of fact or law, and upon Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade consent of the parties, it is ordered, Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D. Mo. 1977) adjudged and decreed: (‘‘Absent a showing of corrupt failure of the government to discharge its duty, the Court, in making its public interest finding, should . . . carefully consider the explanations of the government in the competitive impact statement and its responses to comments in order to determine whether those explanations are reasonable under the circumstances.’’); S. Rep. No. 93–298, at 6 (1973) (‘‘Where the public interest can be meaningfully evaluated simply on the basis of briefs and oral arguments, that is the approach that should be utilized.’’). PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 I. Jurisdiction This Court has jurisdiction over the subject matter of and each of the parties to this action. The Complaint states a claim upon which relief may be granted against defendants under Section 7 of the Clayton Act, as amended (15 U.S.C. 18). E:\FR\FM\07NON1.SGM 07NON1 78198 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES II. Definitions As used in this Final Judgment: A. ‘‘Acquirer’’ means Amsted Rail Company, Inc., or another entity to which defendants divest the Divestiture Assets. B. ‘‘Wabtec’’ means defendant Westinghouse Air Brake Technologies Corp., a Delaware corporation with its headquarters in Wilmerding, Pennsylvania, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees. C. ‘‘Faiveley’’ means defendant Faiveley Transport S.A., a French corporation with its headquarters in Gennevilliers, France, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees. ‘‘Faiveley’’ includes defendant Faiveley Transport North America, a New York corporation headquartered in Greenville, South Carolina, a whollyowned subsidiary of Faiveley Transport S.A. D. ‘‘Amsted’’ means Amsted Rail Company, Inc., an Illinois corporation with its headquarters in Chicago, Illinois, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees. Amsted is a wholly-owned subsidiary of Amsted Industries Incorporated of Chicago, Illinois. E. ‘‘Amsted Rail Faiveley LLC’’ means the ongoing business and all associated assets of a joint venture that currently exists between Faiveley and Amsted, was established in 2010 for the purpose of manufacturing and selling freight car brake components, and has headquarters located in Greenville, South Carolina. F. ‘‘FTEN control valve’’ means the ongoing project and all associated assets of the freight car brake control valve for freight car brake systems developed or under development by Faiveley. G. ‘‘Divestiture Assets’’ means: 1. Faiveley’s full and complete interest, rights, and property in Amsted Rail Faiveley LLC and the FTEN control valve; 2. All tangible assets relating to Amsted Rail Faiveley LLC and the FTEN control valve, including, but not limited to, research and development activities; all manufacturing equipment, tooling and fixed assets, including, at the option of the Acquirer, the braking simulation testing equipment known as the ‘‘whale’’ located at the Greenville, South VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 Carolina, personal property, inventory, office furniture, materials, supplies, and other tangible property; all licenses, permits and authorizations issued by any governmental organization; all contracts, teaming arrangements, agreements, leases, commitments, certifications, and understandings, including supply agreements; all customer lists, contracts, accounts, and credit records; all repair and performance records and all other records; and 3. All intangible assets relating to Amsted Rail Faiveley LLC and the FTEN control valve, including, but not limited to, all patents, licenses and sublicenses, intellectual property, copyrights, trademarks, trade names, service marks, and service names; technical information, computer software and related documentation, know-how, trade secrets, drawings, blueprints, designs, design protocols, and design tools and simulation capability; specifications for materials; specifications for parts and devices; safety procedures for the handling of materials and substances; quality assurance and control procedures; all manuals and technical information Faiveley provides to its own employees, customers, suppliers, agents or licensees; and all research data, including, but not limited to, designs of experiments, and the results of successful and unsuccessful designs and experiments. III. Applicability A. This Final Judgment applies to Wabtec and Faiveley, as defined above, and all other persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise. B. If, prior to complying with Section IV and V of this Final Judgment, defendants sell or otherwise dispose of all or substantially all of their assets or of lesser business units that include the Divestiture Assets, they shall require the purchaser to be bound by the provisions of this Final Judgment. Defendants need not obtain such an agreement from the Acquirer of the assets divested pursuant to this Final Judgment. IV. Divestiture A. Defendants are ordered and directed, within twenty (20) calendar days after the signing of the Hold Separate Stipulation and Order in this matter to divest the Divestiture Assets in a manner consistent with this Final Judgment to Amsted or an Acquirer acceptable to the United States, in its sole discretion. The United States, in its PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. Defendants agree to use their best efforts to divest the Divestiture Assets as expeditiously as possible. B. In the event defendants are attempting to divest the Divestiture Assets to an Acquirer other than Amsted, defendants promptly shall make known, by usual and customary means, the availability of the Divestiture Assets. Defendants shall inform any person making an inquiry regarding a possible purchase of the Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment. C. In accomplishing the divestiture ordered by this Final Judgment, defendants shall offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the Divestiture Assets customarily provided in a due diligence process except such information or documents subject to the attorney-client privileges or work-product doctrine. Defendants shall make available such information to the United States at the same time that such information is made available to any other person. D. Defendants shall provide the Acquirer and the United States information relating to Faiveley personnel with responsibilities for Amsted Rail Faiveley LLC or the FTEN control valve to enable the Acquirer to make offers of employment. Defendants will not interfere with any negotiations by the Acquirer to employ any Faiveley employee whose primary responsibility is the production, development, and sale of products relating to Amsted Rail Faiveley LLC and the FTEN control valve. E. Defendants shall permit the Acquirer of the Divestiture Assets to have reasonable access to personnel and to make inspections of the physical facilities relating to the Divestiture Assets; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process. F. Defendants shall warrant to the Acquirer(s) that each asset will be operational on the date of sale. G. Defendants shall not take any action that will impede in any way the permitting, operation, or divestiture of the Divestiture Assets. E:\FR\FM\07NON1.SGM 07NON1 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES H. Defendants shall warrant to the Acquirer that there are no material defects in the environmental, zoning or other permits pertaining to the operation of each asset, and that following the sale of the Divestiture Assets, defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits relating to the operation of the Divestiture Assets. I. Unless the United States otherwise consents in writing, the divestiture pursuant to Section IV, or by Divestiture Trustee appointed pursuant to Section V, of this Final Judgment, shall include the entire Divestiture Assets, and shall be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Assets can and will be used by the Acquirer as part of a viable, ongoing business in the design, development, manufacture, marketing, servicing, distribution, and sale of products relating to Amsted Rail Faiveley LLC and the FTEN control valve. The divestiture, whether pursuant to Section IV or V of this Final Judgment, shall be made to an Acquirer that, in the United States’s sole judgment, has the intent and capability (including the necessary managerial, operational, technical and financial capability) of competing effectively in the design, development, manufacture, marketing, servicing, distribution, and sale of products relating to Amsted Rail Faiveley LLC and the FTEN control valve; and that none of the terms of any agreement between the Acquirer and defendants give defendants the ability unreasonably to raise the Acquirer’s costs, to lower the Acquirer’s efficiency, or otherwise to interfere in the ability of the Acquirer to compete effectively. V. Appointment of Divestiture Trustee A. If defendants have not divested the Divestiture Assets within the time period specified in Paragraph IV(A), defendants shall notify the United States of that fact in writing. Upon application of the United States, the Court shall appoint a Divestiture Trustee selected by the United States and approved by the Court to effect the divestiture of the Divestiture Assets. B. After the appointment of a Divestiture Trustee becomes effective, only the Divestiture Trustee shall have the right to sell the Divestiture Assets. The Divestiture Trustee shall have the power and authority to accomplish the divestiture to an Acquirer acceptable to the United States at such price and on such terms as are then obtainable upon reasonable effort by the Divestiture Trustee, subject to the provisions of Sections IV, V, and VI of this Final VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 Judgment, and shall have such other powers as this Court deems appropriate. Subject to Paragraph V(D) of this Final Judgment, the Divestiture Trustee may hire at the cost and expense of defendants any investment bankers, attorneys, or other agents, who shall be solely accountable to the Divestiture Trustee, reasonably necessary in the Divestiture Trustee’s judgment to assist in the divestiture. Any such investment bankers, attorneys, or other agents shall serve on such terms and conditions as the United States approves including confidentiality requirements and conflict of interest certifications. C. Defendants shall not object to a sale by the Divestiture Trustee on any ground other than the Divestiture Trustee’s malfeasance. Any such objections by defendants must be conveyed in writing to the United States and the Divestiture Trustee within ten (10) calendar days after the Divestiture Trustee has provided the notice required under Section VI. D. The Divestiture Trustee shall serve at the cost and expense of Wabtec pursuant to a written agreement, on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. The Divestiture Trustee shall account for all monies derived from the sale of the assets sold by the Divestiture Trustee and all costs and expenses so incurred. After approval by the Court of the Divestiture Trustee’s accounting, including fees for its services yet unpaid and those of any professionals and agents retained by the Divestiture Trustee, all remaining money shall be paid to Wabtec and the trust shall then be terminated. The compensation of the Divestiture Trustee and any professionals and agents retained by the Divestiture Trustee shall be reasonable in light of the value of the Divestiture Assets and based on a fee arrangement providing the Divestiture Trustee with an incentive based on the price and terms of the divestiture and the speed with which it is accomplished, but timeliness is paramount. If the Divestiture Trustee and Wabtec are unable to reach agreement on the Divestiture Trustee’s or any agent’s or consultant’s compensation or other terms and conditions of engagement within fourteen (14) calendar days of appointment of the Divestiture Trustee, the United States may, in its sole discretion, take appropriate action, including making a recommendation to the Court. The Divestiture Trustee shall, within three (3) business days of hiring any other professionals or agents, provide written notice of such hiring PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 78199 and the rate of compensation to defendants and the United States. E. Defendants shall use their best efforts to assist the Divestiture Trustee in accomplishing the required divestiture. The Divestiture Trustee and any consultants, accountants, attorneys, and other agents retained by the Divestiture Trustee shall have full and complete access to the personnel, books, records, and facilities of the business to be divested, and defendants shall develop financial and other information relevant to such business as the Divestiture Trustee may reasonably request, subject to reasonable protection for trade secret or other confidential research, development, or commercial information or any applicable privileges. Defendants shall take no action to interfere with or to impede the Divestiture Trustee’s accomplishment of the divestiture. F. After its appointment, the Divestiture Trustee shall file monthly reports with the United States and, as appropriate, the Court setting forth the Divestiture Trustee’s efforts to accomplish the divestiture ordered under this Final Judgment. To the extent such reports contain information that the Divestiture Trustee deems confidential, such reports shall not be filed in the public docket of the Court. Such reports shall include the name, address, and telephone number of each person who, during the preceding month, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person. The Divestiture Trustee shall maintain full records of all efforts made to divest the Divestiture Assets. G. If the Divestiture Trustee has not accomplished the divestiture ordered under this Final Judgment within six months after its appointment, the Divestiture Trustee shall promptly file with the Court a report setting forth (1) the Divestiture Trustee’s efforts to accomplish the required divestiture, (2) the reasons, in the Divestiture Trustee’s judgment, why the required divestiture has not been accomplished, and (3) the Divestiture Trustee’s recommendations. To the extent such report contains information that the Divestiture Trustee deems confidential, such report shall not be filed in the public docket of the Court. The Divestiture Trustee shall at the same time furnish such report to the United States which shall have the right to make additional recommendations consistent with the purpose of the trust. The Court thereafter shall enter such E:\FR\FM\07NON1.SGM 07NON1 78200 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES orders as it shall deem appropriate to carry out the purpose of the Final Judgment, which may, if necessary, include extending the trust and the term of the Divestiture Trustee’s appointment by a period requested by the United States. H. If the United States determines that the Divestiture Trustee has ceased to act or failed to act diligently or in a reasonably cost-effective manner, it may recommend the Court appoint a substitute Divestiture Trustee. a divestiture proposed under Section IV or V shall not be consummated. Upon objection by defendants under Paragraph V(C), a divestiture proposed under Section V shall not be consummated unless approved by the Court. VI. Notice of Proposed Divestiture A. Within two (2) business days following execution of a definitive divestiture agreement, defendants or the Divestiture Trustee, whichever is then responsible for effecting the divestiture required herein, shall notify the United States of any proposed divestiture required by Section IV or V of this Final Judgment. If the Divestiture Trustee is responsible, it shall similarly notify defendants. The notice shall set forth the details of the proposed divestiture and list the name, address, and telephone number of each person not previously identified who offered or expressed an interest in or desire to acquire any ownership interest in the Divestiture Assets, together with full details of the same. B. Within fifteen (15) calendar days of receipt by the United States of such notice, the United States may request from defendants, the proposed Acquirer, any other third party, or the Divestiture Trustee, if applicable, additional information concerning the proposed divestiture, the proposed Acquirer, and any other potential Acquirer. Defendants and the Divestiture Trustee shall furnish any additional information requested within fifteen (15) calendar days of the receipt of the request, unless the parties shall otherwise agree. C. Within thirty (30) calendar days after receipt of the notice or within twenty (20) calendar days after the United States has been provided the additional information requested from defendants, the proposed Acquirer, any third party, and the Divestiture Trustee, whichever is later, the United States shall provide written notice to defendants and the Divestiture Trustee, if there is one, stating whether or not it objects to the proposed divestiture. If the United States provides written notice that it does not object, the divestiture may be consummated, subject only to defendants’ limited right to object to the sale under Paragraph V(C) of this Final Judgment. Absent written notice that the United States does not object to the proposed Acquirer or upon objection by the United States, VIII. Hold Separate Until the divestiture required by this Final Judgment has been accomplished, defendants shall take all steps necessary to comply with the Hold Separate Stipulation and Order entered by this Court. Defendants shall take no action that would jeopardize the divestiture ordered by this Court. VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 VII. Financing Defendants shall not finance all or any part of any purchase made pursuant to Section IV or V of this Final Judgment. IX. Affidavits A. Within twenty (20) calendar days of the filing of the Complaint in this matter, and every thirty (30) calendar days thereafter until the divestiture has been completed under Section IV or V, defendants shall deliver to the United States an affidavit as to the fact and manner of its compliance with Section IV or V of this Final Judgment. Each such affidavit shall include the name, address, and telephone number of each person who, during the preceding thirty (30) calendar days, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person during that period. Each such affidavit shall also include a description of the efforts defendants have taken to solicit buyers for the Divestiture Assets, and to provide required information to prospective Acquirers, including the limitations, if any, on such information. Assuming the information set forth in the affidavit is true and complete, any objection by the United States to information provided by defendants, including limitation on information, shall be made within fourteen (14) calendar days of receipt of such affidavit. B. Within twenty (20) calendar days of the filing of the Complaint in this matter, defendants shall deliver to the United States an affidavit that describes in reasonable detail all actions defendants have taken and all steps defendants have implemented on an ongoing basis to comply with Section VIII of this Final Judgment. Defendants shall deliver to the United States an PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 affidavit describing any changes to the efforts and actions outlined in defendants’ earlier affidavits filed pursuant to this section within fifteen (15) calendar days after the change is implemented. C. Defendants shall keep all records of all efforts made to preserve and divest the Divestiture Assets until one year after such divestiture has been completed. X. Compliance Inspection A. For the purposes of determining or securing compliance with this Final Judgment, or of any related orders such as any Hold Separate Stipulation and Order, or of determining whether the Final Judgment should be modified or vacated, and subject to any legally recognized privilege, from time to time authorized representatives of the United States Department of Justice, including consultants and other persons retained by the United States, shall, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to defendants, be permitted: 1. Access during defendants’ office hours to inspect and copy, or at the option of the United States, to require defendants to provide hard copy or electronic copies of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of defendants, relating to any matters contained in this Final Judgment; and 2. to interview, either informally or on the record, defendants’ officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by defendants. B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, defendants shall submit written reports or response to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested. C. No information or documents obtained by the means provided in this section shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law. E:\FR\FM\07NON1.SGM 07NON1 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES D. If at the time information or documents are furnished by defendants to the United States, defendants represent and identify in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(g) of the Federal Rules of Civil Procedure, and defendants mark each pertinent page of such material, ‘‘Subject to claim of protection under Rule 26(c)(1)(g) of the Federal Rules of Civil Procedure,’’ then the United States shall give defendants ten (10) calendar days notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding). XI. Notification A. Unless such transaction is otherwise subject to the reporting and waiting period requirements of the HartScott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ‘‘HSR Act’’), during the term of this Final Judgment, Wabtec, without providing advance notification to the Antitrust Division, shall not directly or indirectly acquire any assets of or any interest, including, but not limited to, any financial, security, loan, equity, or management interest, in any entity engaged in the design, development, production (including the provision of any input product comprising five percent or more of the value of any final product), marketing, servicing, distribution, or sale of freight car brake systems or components thereof in the United States. B. Such notification shall be provided to the Antitrust Division in the same format as, and per the instructions relating to the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended, except that the information requested in Items 5 through 9 of the instructions must be provided only about freight car brake systems or components thereof described in Section V of the Complaint filed in this matter (including any input product comprising five percent or more of the value of any final product). Notification shall be provided at least thirty (30) calendar days prior to acquiring any such interest, and shall include, beyond what may be required by the applicable instructions, the names of the principal representatives of the parties to the agreement who negotiated the agreement, and any management or strategic plans discussing the proposed transaction. If within the thirty-day period after notification, representatives of the Antitrust Division make a written request for additional information, VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 Wabtec shall not consummate the proposed transaction or agreement until thirty (30) calendar days after submitting all such additional information. Early termination of the waiting periods in this paragraph may be requested and, where appropriate, granted in the same manner as is applicable under the requirements and provisions of the HSR Act and rules promulgated thereunder. This Section shall be broadly construed and any ambiguity or uncertainty regarding the filing of notice under this Section shall be resolved in favor of filing notice. XII. No Reacquisition Wabtec may not reacquire any part of the Divestiture Assets during the term of this Final Judgment. XIII. Retention of Jurisdiction This Court retains jurisdiction to enable any party to this Final Judgment to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions. XIV. Expiration of Final Judgment Unless this Court grants an extension, this Final Judgment shall expire ten years from the date of its entry. XV. Public Interest Determination Entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon and the United States’ responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and response to comments filed with the Court, entry of this Final Judgment is in the public interest. Date: llllllllllllllllll Court approval subject to procedures of Antitrust Procedures and Penalties Act, 15 U.S.C. 16. lllllllllllllllllllll United States District Judge [FR Doc. 2016–26781 Filed 11–4–16; 8:45 am] BILLING CODE P PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 78201 DEPARTMENT OF JUSTICE Antitrust Division United States v. Fayez Sarofim; Proposed Final Judgment and Competitive Impact Statement Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h), that a proposed Final Judgment, Stipulation, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in United States of America v. Fayez Sarofim, Civil Action No. 1:16– cv–02156. On October 27, 2016, the United States filed a Complaint alleging that Fayez Sarofim violated the premerger notification and waiting period requirements of the Hart-ScottRodino Antitrust Improvements Act of 1976, 15 U.S.C. 18a, with respect to his acquisitions of voting securities of Kinder Morgan, Inc. and Kemper Corporation. The proposed Final Judgment, filed at the same time as the Complaint, requires Fayez Sarofim to pay a civil penalty of $720,000. Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Antitrust Division’s Web site at http://www.justice.gov/atr and at the Office of the Clerk of the United States District Court for the District of Columbia. Copies of these materials may be obtained from the Antitrust Division upon request and payment of the copying fee set by Department of Justice regulations. Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division’s Web site, filed with the Court, and, under certain circumstances, published in the Federal Register. Comments should be directed to Daniel P. Ducore, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue NW., CC–8416, Washington, DC 20580 (telephone: 202–326–2526; email: dducore@ftc.gov). Patricia A. Brink, Director of Civil Enforcement. In the United States District Court for the District of Columbia UNITED STATES OF AMERICA, c/o Department of Justice, Washington, D.C. 20530, Plaintiff, v. Fayez Sarofim, Two Houston Center, Suite 2907, Houston, TX 77010, Defendant. Case No.: 1:16–cv–02156 Judge: Rudolph Contreras Filed: 10/27/2016 E:\FR\FM\07NON1.SGM 07NON1

Agencies

[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)]
[Notices]
[Pages 78187-78201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26781]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Westinghouse Air Brake Technologies Corp., 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Hold Separate Stipulation and Order, and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States of America v. Westinghouse Air Brake 
Technologies Corp. et al., Civil Action No. 1:16-cv-02147. On October 
26, 2016, the United States filed a Complaint alleging that 
Westinghouse Air Brake Technologies Corp.'s (``Wabtec'') proposed 
acquisition of Faiveley Transport S.A. and Faiveley Transport North 
America would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The 
proposed Final Judgment, filed at the same time as the Complaint, 
requires Wabtec to divest Faiveley's U.S. freight brakes business.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's Web site at http://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's Web site, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to Maribeth Petrizzi, 
Chief, Litigation II Section, Antitrust Division, Department of 
Justice, 450 Fifth Street NW., Suite 8700, Washington, DC 20530 
(telephone: 202-307-0924).

 Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, U.S. Department of Justice, Antitrust 
Division, 450 Fifth Street NW., Suite 8700, Washington, DC 20530 
Plaintiff, v. Westinghouse Air Brake Technologies Corp., 1001 
Airbrake Avenue, Wilmerding, PA 15148, Faiveley Transport S.A., Le 
Delage Building, Hall Parc--B[acirc]timent 6A, 6[egrave]me 
[eacute]tage, 3, rue du 19 mars 1962, 92230 Gennevilliers, CEDEX--
France and Faiveley Transport North America, 50 Beachtree Boulevard, 
Greenville, SC 29605, Defendants.
Case No.: 1:16-cv-02147
Judge: Tanya S. Chutkan
Filed: 10/26/2016

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to enjoin the proposed acquisition of Faiveley Transport S.A. 
and Faiveley Transport North America (collectively, ``Faiveley'') by 
Westinghouse Air Brake Technologies Corporation (``Wabtec'') and to 
obtain other equitable relief. The United Sates alleges as follows:

I. Introduction

    1. Wabtec proposes to acquire Faiveley, a global provider of 
railway brake equipment components that make up a critical system 
intimately linked to both the performance and safety of trains. 
Faiveley produces its brake system components in the United States 
through its subsidiary, Faiveley Transport North America. Wabtec is a 
leading manufacturer of rail equipment used in the assembly of freight 
cars built for use in the U.S. freight rail network. For purchasers of 
components of freight car brake systems, Wabtec and Faiveley are two of 
the top three suppliers approved by the Association of American 
Railroads (``AAR''), with combined market shares ranging from 
approximately 41 to 96 percent for many of the products in which they 
compete. Where a product must be AAR approved, customers must source it 
from an AAR-approved supplier of that product.
    2. In 2010, Faiveley entered into a joint venture with Amsted Rail 
Company, Inc. (``Amsted''), a rail equipment supplier based in Chicago, 
Illinois, to form Amsted Rail Faiveley LLC (``ARF''). Faiveley owns 
67.5 percent of ARF and Amsted owns the remaining 32.5 percent interest 
in the joint venture. As part of the joint venture, all of the freight 
car brake system components that are manufactured by Faiveley Transport 
North America are marketed and sold to customers by Amsted. Amsted and 
Faiveley do not compete for the sale of brake system components. 
Critically, the joint venture allows Faiveley to bundle brake 
components with Amsted's other products such as wheels and axles, 
thereby increasing its ability to compete for the sale of freight car 
brake system components.
    3. Wabtec's proposed acquisition of Faiveley would eliminate head-
to-head competition in the development, manufacture, and sale of 
several components of freight car brake systems in the United States. 
The proposed acquisition likely would give Wabtec the incentive and 
ability to raise prices or decrease the quality of service provided to 
customers in the railroad freight industry. The proposed acquisition 
also would eliminate future competition for control valves, the most 
safety-critical component on a freight car. If approved, the proposed 
acquisition would eliminate the entry of Faiveley into this market, 
thus maintaining a century-old duopoly between Wabtec and its only 
other control valve rival, and reducing the two incumbent control valve 
suppliers' incentive to compete.
    4. Accordingly, the proposed acquisition likely would substantially 
lessen existing and future competition

[[Page 78188]]

in the development, manufacture, and sale of freight car brake system 
components in the United States in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18, and should be enjoined.

II. Jurisdiction and Venue

    5. The United States brings this action pursuant to Section 15 of 
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain the 
defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    6. Defendants manufacture and sell components of freight car brake 
systems throughout the United States. They are engaged in a regular, 
continuous, and substantial flow of interstate commerce, and their 
activities in the development, manufacture, and sale of rail equipment 
have had a substantial effect upon interstate commerce. The Court has 
subject-matter jurisdiction over this action pursuant to Section 15 of 
the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
    7. Venue is proper in this District under Section 12 of the Clayton 
Act, 15 U.S.C. 22 and 28 U.S.C. 1391(c). Defendants have consented to 
venue and personal jurisdiction in the District of Columbia.

III. Defendants and the Proposed Acquisition

    8. Wabtec is a Delaware corporation headquartered in Wilmerding, 
Pennsylvania. It is one of the world's largest providers of rail 
equipment and services with global sales of $3.3 billion in 2015. 
Wabtec makes and sells rail equipment, including braking equipment, for 
a variety of different end uses, including the railroad freight 
industry. In 2015, Wabtec's annual worldwide sales of freight rail 
equipment were approximately $2 billion.
    9. Faiveley Transport North America is a New York corporation 
headquartered in Greenville, South Carolina. Faiveley makes and sells 
rail equipment, including braking equipment, for a variety of end uses 
to customers in 24 countries, including the United States. In 
particular, it manufactures products used in freight rail applications. 
During the fiscal year beginning April 1, 2015 and ending March 31, 
2016, Faiveley had global sales of approximately [euro]1.1 billion, 
with approximately $174 million of revenue in the United States. 
Faiveley has manufacturing facilities in Europe, Asia, and North 
America, including six U.S. locations. Faiveley Transport North America 
is a wholly-owned subsidiary of defendant Faiveley Transport S.A., a 
soci[eacute]t[eacute] anonyme based in Gennevilliers, France.
    10. On July 27, 2015, Wabtec entered into an Exclusivity Agreement 
with Faiveley whereby it made an irrevocable offer to acquire Faiveley, 
for cash and stock totaling approximately $1.8 billion, including 
assumed debt. The proposed acquisition would create the world's largest 
rail equipment supplier with expected revenue of approximately $4.5 
billion per year and a presence in every key rail market in the world.

IV. Trade and Commerce

A. Industry Overview

    11. Rail freight transport is the use of railroads and freight 
trains to transport cargo. A freight train is a group of freight cars 
hauled by one or more locomotives on a railway. A typical freight 
locomotive can haul as many as 25 to 100 freight cars.
    12. The railroad freight industry plays a significant role in the 
U.S. economy, hauling key commodities such as energy products, 
automobiles, construction materials, chemicals, coal, petroleum, 
equipment, food, metals, and minerals. The U.S. freight rail network 
accounts for approximately 40 percent of the distance all freight 
shipments of commodity goods travel in the United States. The U.S. 
freight rail network is one of the most developed rail networks in the 
world and it supports approximately $60 billion in railroad freight 
shipments each year. This freight network consists of 140,000 miles of 
trackage owned and operated by seven Class I Railroads (as identified 
by the U.S. Department of Transportation), 21 regional railroads, and 
510 local railroads.
    13. Railroads and freight car leasing companies purchase new 
freight cars from car builders. Car builders build the body of the 
freight car and are responsible for sourcing and integrating all of the 
components needed for the various sub-systems required to assemble a 
functioning freight car. The most important sub-system is the safety 
critical brake system. Manufacturers of brake systems and brake system 
components sell their components and systems to car builders for new 
freight cars and directly to railroads and leasing companies for 
aftermarket maintenance of cars. Railroads and freight car leasing 
companies collectively purchase and maintain approximately 1.5 million 
freight cars utilized throughout the U.S. freight rail network. Freight 
railroads in the United States spend over $20 billion annually to 
acquire new freight cars and maintain existing freight car fleets. 
Freight car maintenance is critical for the safety and performance of a 
freight train.

B. Railroad Freight Industry Regulation

    14. Freight cars often must travel over multiple railroads' 
trackage in order to deliver commodities throughout the United States. 
Traveling over multiple lines requires freight car equipment to be 
mechanically interoperable and meet performance standards for certain 
types of rail equipment. In order for the brake systems on individual 
freight cars to work together properly, freight car brake systems must 
be comprised of industry-approved components and meet critical 
performance standards.
    15. The Federal Railroad Administration of the U.S. Department of 
Transportation establishes strict standards to ensure interoperability 
of freight cars in use within the U.S. freight rail network. These 
standards require that certain freight car components achieve common 
performance and interoperability standards. For certain freight rail 
equipment, including freight car brake systems, the AAR is responsible 
for setting technical and performance standards. The AAR is a policy- 
and standard-setting organization comprised of full, affiliate, and 
associate members. Full members include the Class I railroads. 
Affiliate and associate members include rail equipment suppliers and 
freight car owners.
    16. AAR's functions include technical and mechanical standard 
setting for freight rail equipment. The AAR manages fifteen technical 
committees comprised of select employees of full, affiliate, and 
associate members. These committees write technical and performance 
standards for components used on freight trains. They also approve 
products for use within the U.S. freight rail network. Thus, a 
component manufacturer like Wabtec or Faiveley must have AAR approval 
for many significant components of a freight train before its products 
can be used in the United States. The length and difficulty of the AAR-
approval process depends on the nature and function of the train 
component. Brake components face some of the lengthiest and most 
rigorous testing and approval processes because brakes are safety-
critical components that must be fail-safe. The Brake Systems Committee 
of the AAR oversees the review and performance testing of brake 
equipment and it awards incremental approvals over time before a 
component can earn unconditional approval.
    17. Freight car owners and operators view AAR approval as a 
critical certification. Industry participants view

[[Page 78189]]

AAR approval as a high barrier to selling freight car brake systems and 
components in the United States.

C. Freight Car Brake Equipment Purchases

    18. On average, there are expected to be approximately 75,000 new 
freight car builds per year in the United States. Demand for new cars 
is tied to macroeconomic conditions, including demand for the 
commodities that freight cars carry. In recent years demand for freight 
cars has ranged from approximately 63,000 to 81,000 new car builds per 
year. Railroads and freight car leasing companies typically issue 
requests for proposals to freight car builders who compete to provide 
complete freight cars built to specification. Freight car builders 
source sub-systems and components from suppliers, like Wabtec and 
Faiveley. Where a product must be AAR approved, car builders must 
source it from an AAR-approved supplier of that product. For certain 
components of a freight car brake system, Wabtec and Faiveley are two 
of the only three AAR-approved suppliers.
    19. New freight car procurements typically include performance 
specifications identified by customers. Freight car builders use these 
specifications to source and price particular components for the 
procurement. Inclusion in new car procurements also becomes a source 
for long-term revenues for component suppliers. Incumbent suppliers for 
many freight car brake system components enjoy an advantage in the 
aftermarket. Although components are technically interoperable, 
changing suppliers often introduces at least some switching costs and 
increased risk of failure for end-use customers. Thus, competitiveness 
for original equipment sales is critical.
    20. Customers can purchase freight car brake equipment on a 
component-by-component basis. However, a large rail equipment supplier 
will typically offer better pricing to customers who purchase multiple 
freight car brake system components together as a bundle. For example, 
rail equipment suppliers will offer more competitive pricing to 
customers who purchase all the components for an entire freight car 
brake system rather than piecemeal purchases of certain components. 
Because product bundles may span multiple systems on a freight train, 
suppliers with broad offerings often have a competitive advantage over 
niche suppliers.

V. Relevant Markets

    21. Defendants compete across a range of freight car brake system 
components, many of which require AAR approval. Each product described 
below constitutes a line of commerce under Section 7 of the Clayton 
Act, 15 U.S.C. 18, and each is a relevant product market in which 
competitive effects can be assessed. They are recognized in the 
railroad freight industry as separate product lines, they have unique 
characteristics and uses, they have customers that rely specifically on 
these products, they are distinctly priced, and they have specialized 
vendors.
    22. Mergers and acquisitions that reduce the number of competitors 
in already concentrated markets are more likely to substantially lessen 
competition. Concentration can be measured in various ways, including 
by market shares and by the widely-used Herfindahl-Hirschman Index 
(``HHI''). See Appendix. Under the Horizontal Merger Guidelines, post-
acquisition HHIs above 2500 and changes in HHI above 200 trigger a 
presumption that a proposed acquisition is likely to enhance market 
power and substantially lessen competition in a defined market. Given 
the high pre- and post-acquisition concentration levels in the relevant 
markets described below, Wabtec's proposed acquisition of Faiveley 
presumptively violates Section 7 of the Clayton Act. In almost all of 
these markets, customers would face a duopoly after the acquisition.

A. Relevant Market 1: Hand Brakes

    23. A hand brake is a manual wheel located at the end of a freight 
car that, when turned, can engage a freight car's brake system without 
using pneumatic or hydraulic pressure. It is a secondary means to 
prevent a freight car from moving, for example, during maintenance or 
when being connected to a new locomotive.
    24. The market for the development, manufacture, and sale of 
freight car hand brakes is already concentrated. Wabtec and Faiveley 
together hold approximately 60 percent of this market based on the 
quantity of hand brakes sold. Their only significant competitor holds 
most of the remaining share of the hand brakes market. A fourth, 
marginal competitor sells a negligible quantity of hand brakes each 
year. Further, this competitor does not manufacture any other 
significant components of a freight car brake system nor is it likely 
to begin doing so in the foreseeable future. Thus, it is unlikely to 
replace the competition that would be lost as a result of the proposed 
acquisition.
    25. In the U.S. market for the development, manufacture, and sale 
of freight car hand brakes, the pre-acquisition HHI is 3,500. The post-
acquisition HHI would be in excess of 5,000, with an increase in HHI in 
excess of 1,500. Thus, this market is highly concentrated and would 
become significantly more concentrated as a result of the proposed 
acquisition.

B. Relevant Market 2: Slack Adjusters

    26. A slack adjuster is a pneumatically-driven ``arm'' that applies 
pressure to the brake shoe (a friction material) in order to change the 
brake shoe's position relative to the train's wheel. As the brake shoe 
wears down, this adjustment in position maintains the brake systems' 
ability to apply the correct amount of braking force by ensuring the 
brake shoe is applied appropriately to the wheel to achieve optimal 
braking capability.
    27. Combined, Wabtec and Faiveley have approximately 76 percent of 
this market based on quantity sold. Their only significant competitor 
has a market share of approximately 24 percent, thereby making the 
proposed acquisition a virtual merger-to-duopoly in the market for the 
development, manufacture, and sale of slack adjusters. The proposed 
acquisition threatens to further concentrate this market, as evidenced 
by the pre- and post-merger HHIs. The post-acquisition HHI would be 
approximately 6,300, reflecting an increase of approximately 2,800 as a 
result of the acquisition.

C. Relevant Market 3: Truck-Mounted Brake Assemblies

    28. Freight car braking equipment is often mounted under the bogie 
(e.g., car), thereby serving as the foundation for the wheels. Truck-
mounted brake assemblies (``TMBs''), however, are an approach to 
mounting the brakes on freight car designs for which body-mounted 
brakes are not suitable. TMBs are free standing equipment that do not 
require additional rigging and so are significantly lighter than their 
bogie counterparts. They are commonly used for special lightweight or 
low profile freight car designs.
    29. Post-acquisition, the market for the development, manufacture, 
and sale of TMBs would be highly concentrated. Combined, Wabtec and 
Faiveley have approximately a 96 percent share of the market based on 
quantity sold. The post-acquisition HHI of the merged firm would be 
approximately 9,200, with an increase of approximately 3,600 resulting 
from the acquisition.

[[Page 78190]]

D. Relevant Market 4: Empty Load Devices

    30. Empty load devices are incorporated into every freight car and 
detect when a freight car is empty. The empty load device relays this 
information to the brake system control board, which is then able to 
reduce the amount of braking force applied to the brakes on a freight 
car that is empty so that it decelerates in concert with the remainder 
of the freight cars in tow.
    31. Post acquisition, the market for the development, manufacture, 
and sale of empty load devices would be highly concentrated. Combined, 
Wabtec and Faiveley have a 60 percent share of the market based on 
quantity sold. The post-acquisition HHI of the merged firm would be 
approximately 5,100, with an increase of approximately 1,700 resulting 
from the acquisition.

E. Relevant Market 5: Brake Cylinders

    32. A brake cylinder is a component of a freight car brake system 
that converts compressed air into mechanical force to apply the brake 
shoe to the wheel in order to decelerate or stop the train.
    33. Post-acquisition, the market for the development, manufacture, 
and sale of brake cylinders would be highly concentrated. Combined, 
Wabtec and Faiveley have approximately a 41 percent share of the market 
based on quantity sold. The post-acquisition HHI of the merged firm 
would be approximately 5,100 with an increase of approximately 800 
resulting from the acquisition.

F. Relevant Market 6: Control Valve and Co-Valves

    34. Modern trains rely upon a fail-safe air (or pneumatic) brake 
system that uses changes in air pressure to signal each freight car to 
release its brakes. A reduction or loss of air pressure applies the 
brakes using the compressed air in the air reservoir. An increase in 
air pressure decreases the braking force applied until it is released. 
The control valve, often described as the brain of a freight car's 
brake system, regulates the flow of air to engage or disengage the 
brakes.
    35. A control valve is the most highly-engineered, technologically-
sophisticated component in a freight car brake system. Without it, a 
supplier cannot offer a complete freight car brake system. The 
development of a control valve also requires significant development 
time and financial resources. In addition, it faces one of the railroad 
freight industry's lengthiest and most rigorous testing and approval 
processes.
    36. The market for the development, manufacture, and sale of 
control valves is characterized by a century-old duopoly between Wabtec 
and another manufacturer. Over the past five years, Wabtec had 
approximately 40 percent of the U.S. control valve market and its rival 
had the other 60 percent of the market.
    37. On June 29, 2016, Faiveley obtained conditional approval from 
the AAR to sell a control valve. In doing so, it disrupted the duopoly 
by becoming the first firm in over 25 years and only the second firm in 
the last 50 years to develop a control valve and make substantial 
progress through the industry's formidable testing and approval process 
for freight car control valves. Thus, the proposed acquisition would 
eliminate a third potential supplier of control valves, and continue a 
longstanding duopoly for the foreseeable future.
    38. Working closely with the control valve are its complementary 
valves: The dirt collector, angle cock, and vent valve (collectively, 
``co-valves''). A dirt collector is a ball style cut-out-cock with a 
dirt chamber that is installed adjacent to the control valve. It allows 
for impurities in the air compressor to be filtered out to keep the air 
lines feeding the braking system clear of obstructions that would 
reduce air pressure. An angle cock is placed at the end of the brake 
pipe and provides a means for closing the brake pipe at the end of the 
freight car. A vent valve is a device on a freight car that reacts to a 
rapid drop in brake pipe pressure and is used to exhaust air from the 
brake pipe during emergency brake applications. For new freight car 
builds, sales of co-valves correlate with the sale of the control 
valve. Customers have a preference for purchasing co-valves and control 
valves from the same supplier, to which they return for replacement 
parts in the aftermarket. While Faiveley currently has insignificant 
sales of angle cocks, vent valves, and dirt collectors, it is an AAR-
approved supplier of these products.

G. Geographic Market

    39. Based on customer location and the governing regulatory 
framework, the United States is the relevant geographic market for the 
development, manufacture, and sale of freight brake components. Wabtec 
and Faiveley compete with each other for customers located throughout 
the United States. When a geographic market is defined based on the 
location of customers, competitors in the market are firms that sell to 
customers in the specified region even though some suppliers that sell 
into the relevant market may be located outside the geographic market. 
In addition, before suppliers can sell components of freight car brake 
systems in the United States, they must first get AAR approval. The 
AAR's regulatory authority requires products be certified for 
interoperability within the U.S. freight rail network. Because these 
products are certified for use and sale anywhere in the United States, 
the regulatory framework determines which firms can supply the U.S. 
customer base, which supports a United States geographic market. 
Furthermore, suppliers of freight car brake systems and components 
typically deliver their products and services to customers' locations 
and are able to price discriminate based on those locations.
    40. In addition, a small but significant increase in price of each 
of the foregoing components of a freight car brake system sold into the 
United States would not cause a sufficient number of U.S. customers to 
turn to providers of freight brake components sold into other countries 
because those products lack AAR approval and interoperability with U.S. 
freight rail networks. Accordingly, the United States is a relevant 
geographic market within the meaning of Section 7 of the Clayton Act.

VI. Anticompetitive Effects

    41. Wabtec and Faiveley presently compete in the development, 
manufacture, and sale of many components of a freight car brake system, 
including hand brakes, slack adjusters, empty load devices, TMBs and 
brake cylinders. The defendants' combined shares in each of these 
markets range from approximately 41 to 96 percent. Therefore, the 
unilateral competitive effects of the proposed acquisition are 
presumptively harmful in these product markets under the Horizontal 
Merger Guidelines. The proposed acquisition likely will result in 
unilateral effects that substantially lessen competition in the markets 
for hand brakes, load detection devices, slack adjusters, TMBs, and 
brake cylinders, respectively.
    42. In each of the foregoing relevant markets, Wabtec and Faiveley 
presently compete against each other and only one other large 
competitor. Prices and other terms of trade are usually determined by 
negotiations between suppliers and customers. Products are not highly 
differentiated by function or performance, and price is the primary 
customer consideration given that performance is presumed after 
approval by the industry's standard-setting body, the AAR.

[[Page 78191]]

    43. A merger between two competing sellers reduces the ability of 
buyers to negotiate better contract terms, including price, by 
leveraging competing offers. The loss of customer negotiating power can 
significantly enhance the ability and incentive of the merged entity to 
offer less competitive terms. Customers likely derive significant 
benefits from having Faiveley in the market today, as reflected by its 
substantial market shares in the relevant freight brake components 
identified above. The resulting loss of a competitor and increased 
concentration of market share indicate that the acquisition likely will 
result in significant harm from expected price increases and decreases 
in quality of service.
    44. When the proposed acquisition was announced, Wabtec and a 
second manufacturer were the only AAR-approved suppliers of control 
valves, a duopolistic market they had shared for over a century.
    45. As the second-largest railway brake manufacturer in the world, 
Faiveley was uniquely positioned to enter the control valve market. 
Faiveley had developed a control valve prototype that it intended to 
shepherd through the AAR's control valve testing and approval process. 
If successful, it would have become a third control valve supplier. But 
for the merger, Faiveley likely would have entered the control valve 
market, thereby invigorating competition between Wabtec and its only 
competitor in the control valve market. The entry of a third supplier 
of control valves likely would increase competition and allow customers 
to negotiate better prices and terms.
    46. Faiveley's entry into the control valve market would pose an 
immediate threat to the incumbent suppliers, forcing them to compete 
aggressively or risk losing a sale to Faiveley. Faiveley's customers 
anticipate it would offer price competition in order to gain quick 
acceptance of its control valve. As a result, Faiveley likely would 
have had a substantial impact on pricing, service and other commercial 
terms offered by the incumbent suppliers, even with a small initial 
share of actual sales. Therefore, the proposed acquisition is likely to 
result in anticompetitive unilateral effects in the market for control 
valves.

VII. Entry

    47. Given the substantial time required to develop and qualify a 
component of a freight car brake system, timely and sufficient entry by 
other competitors into any of the relevant markets is unlikely to 
mitigate the harmful effects of the proposed acquisition.
    48. The likelihood of another potential entrant in the control 
valve market is even more remote given the historical dearth of 
meaningful attempts to enter this market, as well as the substantial 
time and cost associated with entry into the control valve market.

VIII. Violation Alleged

    49. The acquisition of Faiveley by Wabtec likely would 
substantially lessen competition in each of the relevant markets in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    50. Unless enjoined, the acquisition likely would have the 
following anticompetitive effects, among others:
    (a) Actual and potential competition between Wabtec and Faiveley in 
the relevant markets would be eliminated;
    (b) competition generally in the relevant markets would be 
eliminated; and
    (c) prices and commercial terms for the relevant products would be 
less favorable, and quality and service relating to these products 
likely would decline.

IX. Request for Relief

    51. The United States requests that this Court:
    (a) Adjudge and decree Wabtec's proposed acquisition of Faiveley to 
be unlawful and in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18;
    (b) preliminarily and permanently enjoin and restrain defendants 
and all persons acting on their behalf from consummating Wabtec's 
proposed acquisition or from entering into or carrying out any 
contract, agreement, plan, or understanding, the effect of which would 
be to combine Faiveley with the operations of Wabtec;
    (c) award the United States its costs of this action; and
    (d) award the United States such other relief as the Court deems 
just and proper.


Dated: October 26, 2016

Respectfully submitted,

FOR PLAINTIFF UNITED STATES:

Renata B. Hesse (DC Bar #466107)
Acting Assistant Attorney General
Antitrust Division

Sonia K. Pfaffenroth
Deputy Assistant Attorney General
Antitrust Division

Patricia A. Brink
Director of Civil Enforcement
Antitrust Division

Maribeth Petrizzi (DC Bar #435204)
Chief, Litigation II Section
Antitrust Division

Stephanie A. Fleming
Assistant Chief, Litigation II Section
Antitrust Division

Doha Mekki*
James K. Foster, Jr.
Erin C. Grace
Daniel J. Monahan
Suzanne Morris
Trial Attorneys

United States Department of Justice
Antitrust Division, Litigation II Section
450 Fifth Street NW., Suite 8700
Washington, DC 20530
Telephone: (202) 598-8023
Facsimile: (202) 514-9033
doha.mekki@usdoj.gov

*LEAD ATTORNEY TO BE NOTICED

Appendix

Herfindahl-Hirschman Index

    The Herfindahl-Hirschman Index (``HHI'') is a commonly accepted 
measure of market concentration. The HHI is calculated by squaring 
the market share of each firm competing in the relevant market and 
then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of 30, 30, 20, and 20 percent, 
the HHI is 2,600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). The HHI 
takes into account the relative size distribution of the firms in a 
market. It approaches zero when a market is occupied by a large 
number of firms of relatively equal size, and reaches its maximum of 
10,000 points when a market is controlled by a single firm. The HHI 
increases both as the number of firms in the market decreases and as 
the disparity in size between those firms increases.

United States District Court for the District of Columbia

    United States Of America, Plaintiff, v. Westinghouse Air Brake 
Technologies Corp., Faiveley Transport S.A., and Faiveley Transport 
North America, Defendants.
Case No.: 1:16-cv-02147
Judge: Tanya S. Chutkan
Filed: 10/26/2016

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On July 27, 2015, Defendant Westinghouse Air Brake Technologies 
Corp. (``Wabtec'') and Defendants Faiveley Transport S.A. and Faiveley 
Transport North America (``Faiveley'') entered into an Exclusivity 
Agreement pursuant to which Wabtec made an irrevocable offer to acquire 
Faiveley for cash and stock totaling approximately $1.8 billion, 
including assumed debt. The United States filed a civil antitrust

[[Page 78192]]

Complaint on October 26, 2016, seeking to enjoin the proposed 
acquisition. The Complaint alleges that the acquisition likely would 
lessen competition substantially for the development, manufacture, and 
sale of various railroad freight car brake components including hand 
brakes, slack adjusters, truck-mounted brake assemblies, empty load 
devices, brake cylinders, and brake control valves in the United States 
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. This loss 
of competition likely would result in significant harm from expected 
price increases and decreases in quality of service by the incumbent 
suppliers in the markets for those products.
    At the same time the Complaint was filed, the United States filed a 
Hold Separate Stipulation and Order and a proposed Final Judgment, 
which are designed to eliminate the anticompetitive effects of the 
acquisition. Under the proposed Final Judgment, which is explained more 
fully below, Defendants are required to divest Faiveley's entire U.S. 
freight car brakes business, including all assets relating to 
Faiveley's freight car brake control valve development project (known 
as the FTEN) to a named buyer, Amsted Rail Company, Inc. (``Amsted''). 
These assets collectively are referred to as the ``Divestiture 
Assets.'' Under the terms of the Hold Separate Stipulation and Order, 
Defendants will take certain steps to ensure that the Divesture Assets 
are operated as a competitively independent, economically viable and 
ongoing business concern, that the Divestiture Assets will remain 
independent and uninfluenced by the consummation of the acquisition; 
and that competition is maintained during the pendency of the ordered 
divestiture.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    Wabtec is a Delaware corporation headquartered in Wilmerding, 
Pennsylvania. It is one of the world's largest providers of rail 
equipment and services with global sales of $3.3 billion in 2015. In 
the United States, Wabtec makes and sells rail equipment, including 
braking equipment, for a variety of different end-uses, including the 
railroad freight industry. Wabtec's annual global sales of freight rail 
equipment totaled approximately $2 billion in 2015.
    Faiveley Transport S.A. is a soci[eacute]t[eacute] anonyme based in 
Gennevilliers, France. Faiveley makes and sells rail equipment, 
including braking equipment, for a variety of end uses to customers in 
24 countries, including the United States. In particular, it 
manufactures products used in freight rail applications. During the 
fiscal year beginning April 1, 2015 and ending March 31, 2016, Faiveley 
had global sales of approximately [euro]1.1 billion, with approximately 
$174 million of revenue in the United States. Faiveley has 
manufacturing facilities in Europe, Asia, and North America, including 
six U.S. locations.
    Faiveley Transport North America is a wholly-owned subsidiary of 
Faiveley Transport S.A. It is a New York Corporation headquartered in 
Greenville, South Carolina. It is the sole business unit of Faiveley 
that is responsible for the development, manufacture, and sale of 
freight car brake components in the United States.
    In 2010, Faiveley entered into a joint venture with Amsted, a rail 
equipment supplier based in Chicago, Illinois, to form Amsted Rail 
Faiveley, LLC (``ARF''). Faiveley owns 67.5 percent of ARF and Amsted 
owns the remaining 32.5 percent. As part of the joint venture, all of 
the freight car brake components that are manufactured by Faiveley 
currently are marketed and sold to customers by Amsted. Critically, the 
joint venture allows Faiveley to bundle brake components with Amsted's 
other products such as wheels and axles, thereby increasing its ability 
to compete for the sale of freight car brake components against Wabtec.
    On July 27, 2015, Wabtec and Faiveley entered into an Exclusivity 
Agreement whereby Wabtec would acquire Faiveley for cash and stock 
totaling approximately $1.8 billion, including assumed debt. The 
proposed acquisition would create the world's largest rail equipment 
supplier with expected revenue of approximately $4.5 billion per year 
and a presence in every key rail market in the world. As part of that 
acquisition, Wabtec proposed to acquire all of Faiveley's freight car 
brakes business in the United States, including its interest in the ARF 
joint venture and Faiveley's FTEN freight car brake control valve now 
being developed. This acquisition is the subject of the Complaint and 
proposed Final Judgment filed by the United States on October 26, 2016.

B. Background on Freight Car Brake Equipment Purchases

    Rail freight transport is the use of railroads and freight trains 
to transport cargo. The railroad freight industry plays a significant 
role in the U.S. economy, hauling key commodities such as energy 
products, automobiles, construction materials, chemicals, coal, 
petroleum, equipment, food, metals, and minerals. The U.S. freight rail 
network accounts for approximately 40 percent of the distance all 
freight shipments of commodity goods travel in the United States. The 
U.S. freight rail network is one of the most developed rail networks in 
the world and it supports approximately $60 billion in railroad freight 
shipments each year. This freight network consists of 140,000 miles of 
trackage owned and operated by seven Class I Railroads, 21 regional 
railroads, and 510 local railroads.
    In order to deliver commodities throughout the United States, 
freight cars often must travel over multiple railroads' trackage. 
Traveling over multiple lines requires freight car equipment to be 
mechanically interoperable and meet common performance standards for 
certain types of rail equipment. In order for the brake systems on 
individual freight cars to work together properly, freight car brake 
systems must be comprised of industry-approved components and meet 
critical performance standards. For certain freight rail equipment, 
including freight car brake systems, the Association of American 
Railroads (``AAR'') is responsible for setting technical and 
performance standards. The AAR is a policy- and standard-setting 
organization comprised of full, affiliate, and associate members. Full 
members include the Class I railroads. Affiliate and associate members 
include rail equipment suppliers and freight car owners.
    AAR's functions include technical and mechanical standard setting 
for freight rail equipment. The AAR manages fifteen technical 
committees that write technical and performance standards for all 
components used on freight trains and approve products for use. Thus, a 
component manufacturer must have AAR approval for brake components 
before they can be used. Brake components face some of the lengthiest 
and most rigorous testing and approval processes because brakes are 
safety-critical components that must be fail-safe. The Brake Systems 
Committee of the AAR oversees the review and performance tests of 
braking equipment

[[Page 78193]]

and it awards incremental approvals over time before a component can 
earn unconditional approval. Freight car owners and operators view AAR 
approval as a critical certification. Industry participants view AAR 
approval as a high barrier to selling freight car brake systems and 
components in the United States.
    Railroads and freight car leasing companies collectively spend over 
$20 billion annually to obtain new freight cars and to maintain 
approximately 1.5 million freight cars utilized throughout the United 
States. On average, there are expected to be approximately 75,000 new 
freight car builds per year in the United States, and demand for new 
cars is tied to macroeconomic conditions, including demand for the 
commodities these freight cars carry. In recent years, demand for 
freight cars has ranged from approximately 63,000 to 81,000 new car 
builds. Railroads and freight car leasing companies typically issue 
requests for proposals to freight car builders who compete to provide 
complete freight cars built to specification. Freight car builders 
source sub-systems and components from suppliers like, Wabtec and 
Faiveley. Where a product must be AAR approved, car builders must 
source it from an AAR-approved supplier of that product. For certain 
components of a freight car brake system, Wabtec and Faiveley are two 
of the only three AAR-approved suppliers of the product.
    New freight car procurements typically include performance 
specifications identified by customers. Freight car builders use these 
specifications to source and price particular components for the 
procurement. Inclusion in new car procurements also becomes a source 
for long-term revenues for component suppliers. Incumbent suppliers for 
many freight car brake system components enjoy an advantage in the 
aftermarket. Although components are technically interoperable, 
changing suppliers often introduces switching costs and increased risk 
of failure for end-use customers. Thus, competitiveness for original 
equipment sales is critical.

C. Relevant Markets Affected by the Proposed Acquisition

    Defendants compete across a range of freight car brake system 
components that require AAR approval. The Complaint alleges that each 
of these brake system components is a relevant product market in which 
competitive effects can be assessed. The different components are 
recognized in the railroad freight industry as separate product lines, 
they have unique characteristics and uses, they have customers that 
rely specifically on these products, they are distinctly priced, and 
they have specialized vendors. Competition would likely be lessened 
with respect to those components as a result of the proposed 
acquisition because there would be one fewer substantial equipment 
manufacturer in each of these highly concentrated markets. For 
purchasers of components of freight car brake components, Wabtec and 
Faiveley are two of the top three suppliers, with combined market 
shares of approximately 41 to 96 percent for the products in which they 
compete. Faiveley is expected to be an even stronger competitor after 
full commercialization of the FTEN.
1. U.S. Markets for Hand Brakes, Slack Adjusters, Truck-Mounted Brake 
Assemblies, Empty Load Devices, and Brake Cylinders
    The Complaint alleges likely harm in five distinct product markets 
for freight car brake components that Faiveley currently sells under 
and through the ARF joint venture: Hand brakes, slack adjusters, truck-
mounted brake assemblies (``TMBs''), empty load devices, and brake 
cylinders. A hand brake is a manual wheel located at the end of a 
freight car that, when turned, can engage a freight car's brakes system 
without using pneumatic or hydraulic pressure. It is a secondary means 
to prevent a freight car from moving, for example, during maintenance 
or when being connected to a new locomotive. A slack adjuster is a 
pneumatically-driven ``arm'' that applies pressure to the brake shoe (a 
friction material) in order to change the brake shoe's position 
relative to the train's wheel. As the brake shoe wears down, this 
adjustment in position maintains the brake systems' ability to apply 
the correct amount of braking force by ensuring the brake shoe is 
applied appropriately to the wheel to achieve optimal braking 
capability. TMBs are an approach to mounting brakes on freight car 
designs for which body-mounted brakes are not suitable. TMBs are free-
standing equipment that do not require additional rigging and so are 
significantly lighter than body-mounted brakes. They are commonly used 
for special lightweight or low profile freight car designs. Empty load 
devices are incorporated into every freight car and detect when a 
freight car is empty. The empty load device relays this information to 
the brake system control board, which is then able to reduce the amount 
of braking force applied to the brakes on a freight car that is empty 
so that it decelerates in concert with the remainder of the freight 
cars in tow. A brake cylinder is a component of a freight car brake 
system that converts compressed air into mechanical force to apply the 
brake shoe to the wheel in order to stop or slow the train.
2. U.S. Market for Freight Brake Control Valves and Co-Valves
    The Complaint also alleges likely harm in a distinct product market 
for freight car brake control valves and the associated co-valves that 
are typically sold with them. The control valve, often described as the 
brain of a freight car's brake system, regulates the flow of air to 
engage or disengage the brakes. A control valve is the most highly-
engineered, technologically-sophisticated component in a freight car 
brake system. Without it, a supplier cannot offer a complete freight 
car brake system. The development of a control valve also requires 
significant development time and financial resources. In addition, it 
faces one of the railroad freight industry's lengthiest and most 
rigorous testing and approval processes. This results in extremely high 
entry barriers for this market.
    Working closely with the control valve are its complementary 
valves: The dirt collector, angle cock, and vent valve (collectively, 
``co-valves''). A dirt collector is a ball style cut-out-cock with a 
dirt chamber that is installed adjacent to the control valve. It allows 
for impurities in the air compressor to be filtered out to keep the air 
lines feeding the braking system clear of obstructions that would 
reduce air pressure. An angle cock is placed at the end of the brake 
pipe and provides a means for closing the brake pipe at the end of the 
freight car. A vent valve is a device on a freight car that reacts to a 
rapid drop in brake pipe pressure and is used to exhaust air from the 
brake pipe during emergency brake applications. These co-valves are an 
essential part of the development, manufacture, and sale of control 
valves, and for new freight car builds, sales of co-valves correlate 
with the sale of the control valve.
    The market for the development, manufacture, and sale of control 
valves is characterized by a century-old duopoly between Wabtec and 
another manufacturer. Over the past five years, Wabtec had 
approximately 40 percent of the U.S. control valve market and its rival 
had the other 60 percent of the market.
    On June 29, 2016, after a lengthy and expensive development 
process, Faiveley obtained conditional approval from the AAR to sell 
its control valve. In doing so, it become the first firm in over 25 
years and only the second in the

[[Page 78194]]

last 50 years to develop a control valve and make substantial progress 
through the industry's formidable testing and approval process. 
Faiveley has built the first 200 units and satisfactorily completed all 
AAR laboratory tests. It projects sales of a few thousand units over 
the next few years as it works with railroads to continue to test and 
demonstrate the FTEN in various functional environments. Full 
commercialization and unconditional AAR approval is expected within 
seven years.

D. Geographic Market

    As alleged in the Complaint, the United States is the relevant 
geographic market for the development, manufacture, and sale of freight 
brake components. Wabtec and Faiveley compete with each other for 
customers located throughout the United States.
    When a geographic market is defined based on the location of 
customers, competitors in the market are firms that sell to customers 
in the specified region, even though some suppliers that sell into the 
relevant market may be located outside the geographic market. Before 
suppliers can sell components of freight car brake systems in the 
United States, they must receive AAR approval. The AAR's regulatory 
authority requires products be certified for interoperability within 
the U.S. freight rail network. Because these products are certified for 
use and sale anywhere in the United States, the regulatory framework 
determines which firms can supply the U.S. customer base, which 
supports a United States geographic market. Furthermore, suppliers of 
freight car brake systems and components typically deliver their 
products and services to customers' locations and are able to price 
discriminate based on customers' locations.
    In addition, a small but significant increase in price of each of 
the foregoing components of a freight car brake system sold into the 
United States would not cause a sufficient number of U.S. customers to 
turn to providers of freight brake components sold into other countries 
because those products lack AAR approval and interoperability with U.S. 
freight rail networks.

E. Anticompetitive Effects

1. Freight Car Hand Brakes, Slack Adjusters, Truck-Mounted Brake 
Assemblies, Empty Load Devices, and Brake Cylinders
    Wabtec and Faiveley presently compete vigorously in the 
development, manufacture, and sale of hand brakes, slack adjusters, 
TMBs, empty load devices, and brake cylinders, and because these 
markets are highly concentrated and subject to high entry barriers, 
unilateral anticompetitive effects would be likely to result from the 
acquisition. In each of the foregoing relevant markets, Wabtec and 
Faiveley presently compete against each other and another large 
competitor in a bargaining format where products are not highly 
differentiated by function or performance and price is the primary 
customer consideration, given that performance is presumed after 
approval by the industry's standard-setting body, the AAR. Given the 
nature and the extent of this competition, a merger between two 
competing sellers would remove a buyer's ability to negotiate these 
sellers against each other. The loss of this bargaining competition can 
significantly enhance the ability and incentive of the merged entity to 
obtain a result more favorable to it and less favorable to the buyer 
than the merging firms would have obtained separately, absent the 
merger. As its substantial market shares attest, customers derive 
significant benefits from having Faiveley in the market today. The 
resulting loss of a competitor and increased concentration of market 
share indicate that the acquisition likely will result in significant 
harm from expected price increases and decreases in quality of service 
if the proposed acquisition is consummated.
2. Freight Car Control Valves and Co-Valves
    Wabtec and a second manufacturer are now the only unconditionally 
approved suppliers of freight car brake control valves. As the second-
largest railway brake manufacturer in the world, Faiveley was uniquely 
positioned to enter this market because of both its general competency 
and the substantial progress it has already made in developing the 
product. Absent the merger it would have become the only other freight 
car brake control valve supplier.
    The proposed acquisition would eliminate future competition for the 
development, manufacture, and sale of control valves by eliminating 
Faiveley's entry into this market. Faiveley's entry into the control 
valve market would have posed an immediate threat to the incumbent 
suppliers' by forcing them to compete aggressively or risk losing a 
sale to Faiveley. This market is also characterized by bargaining and 
price competition and involves the same competitive dynamics described 
above. Faiveley's customers would have enjoyed enhanced price 
competition immediately as Faiveley strove to gain quick acceptance of 
its control valve. Over the long term, the existence of Faiveley as a 
third supplier would have continued to enhance competition.
    Without the required divestiture of assets, Wabtec's acquisition of 
Faiveley would have eliminated important head-to-head competition in 
the development, manufacture, and sale of freight car brake components 
and likely would have given Wabtec the incentive and ability to raise 
prices and decrease the quality of service provided to the railroad 
freight car industry. Absent the required divestiture of assets, the 
acquisition also would have eliminated a third potential supplier of 
control valves, thereby freezing in place a longstanding duopoly in 
that market.
F. Barriers to Entry
    Given the substantial time required to develop and qualify a 
component of a freight car brake system, timely and sufficient entry by 
other competitors into any of the relevant markets, is unlikely to 
mitigate the harmful effects of the proposed acquisition. The 
likelihood of another potential entrant in the control valve market is 
particularly remote given the historical dearth of meaningful attempts 
to enter this market, as well as the substantial time and cost 
associated with entry into the control valve market.

III. Explanation of the Proposed Final Judgment

    The divestitures required by the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in the 
relevant markets by establishing a new, independent, and economically 
viable competitor in the development, manufacture, and sale of freight 
car brake components by quickly transferring full ownership of the ARF 
joint venture to Amsted. It is also expected to eliminate the 
anticompetitive effects of the acquisition from the loss of competition 
in the development, manufacture, and sale of brake control valves by 
transferring to Amsted all assets relating to the FTEN control valve 
project, including the FTEN valve itself, as well as dirt collectors, 
angle cocks, and vent valves.
    Paragraph II(G) of the proposed Final Judgment defines the 
Divestiture Assets to include all assets owned or under the control of 
Faiveley at the current ARF facility in Greenville, South Carolina, and 
include Faiveley's full and complete interest, rights, and property in 
ARF and the FTEN control valve. The Divestiture Assets include all 
tangible assets relating to ARF and the FTEN control valve, including, 
but not limited

[[Page 78195]]

to, research and development activities; all manufacturing equipment, 
tooling and fixed assets, including, at the option of the Acquirer, the 
braking simulation testing equipment known as the ``whale'' located at 
Greenville, South Carolina, personal property, inventory, office 
furniture, materials, supplies, and other tangible property; all 
licenses, permits and authorizations issued by any governmental 
organization; all contracts, teaming arrangements, agreements, leases, 
commitments, certifications, and understandings, including supply 
agreements; all customer lists, contracts, accounts, and credit 
records; all repair and performance records, and all other records.
    The Divestiture Assets also include all intangible assets relating 
to ARF and the FTEN control valve, including, but not limited to, all 
patents, licenses and sublicenses, intellectual property, copyrights, 
trademarks, trade names, service marks, service names, technical 
information, computer software and related documentation, know-how, 
trade secrets, drawings, blueprints, designs, design protocols, 
specifications for materials, specifications for parts and devices, 
safety procedures for the handling of materials and substances, quality 
assurance and control procedures, design tools and simulation 
capability, all manuals and technical information Faiveley provides to 
its own employees, customers, suppliers, agents or licensees, and all 
research data, including, but not limited to, designs of experiments, 
and the results of successful and unsuccessful designs and experiments.
    Paragraph IV(A) of the proposed Final Judgment requires Defendants, 
within twenty (20) calendar days after the signing of the Hold Separate 
Stipulation and Order in this matter to divest the Divestiture Assets 
in a manner consistent with the Final Judgment to Amsted or an Acquirer 
acceptable to the United States, in its sole discretion. The 
Divestiture Assets must be divested in such a way as to satisfy the 
United States in its sole discretion that they assets can and will be 
operated by the purchaser as a viable, ongoing business that can 
compete effectively in the relevant market. Defendants must take all 
reasonable steps necessary to accomplish the divestiture quickly and 
shall cooperate with the named acquirer (Amsted) or any other 
prospective purchaser. The United States, in its sole discretion, may 
agree to one or more extensions of this time period not to exceed sixty 
(60) calendar days in total, and shall notify the Court in such 
circumstances.
    In the event that Defendants do not accomplish the divestiture 
within the period prescribed in the proposed Final Judgment, Paragraph 
V(A) of the proposed Final Judgment provides that the Court will 
appoint a trustee selected by the United States to effect the 
divestiture. If a trustee is appointed, the proposed Final Judgment 
provides that Wabtec will pay all costs and expenses of the trustee. 
The trustee's commission will be structured so as to provide an 
incentive for the trustee based on the price obtained and the speed 
with which the divestiture is accomplished. After his or her 
appointment becomes effective, the trustee will file monthly reports 
with the Court and the United States setting forth his or her efforts 
to accomplish the divestiture. At the end of six months, if the 
divestiture has not been accomplished, the trustee and the United 
States will make recommendations to the Court, which shall enter such 
orders as appropriate, in order to carry out the purpose of the trust, 
including extending the trust or the term of the trustee's appointment.
    Paragraph IV(I) of the proposed Final Judgment provides that final 
approval of the divestiture, including the identity of the Acquirer, is 
left to the sole discretion of the United States to ensure the 
continued independence and viability of the Divestiture Assets in the 
relevant markets. In this matter, Amsted has been identified as the 
expected purchaser of the Divestiture Assets and is currently in final 
negotiations with Defendants for a purchase agreement. After a thorough 
examination of Amsted, its plans for the Divestiture Assets and the 
proposed sale agreements, as well as consideration of feedback from 
customers, the United States approved Amsted as the buyer. Amsted is a 
strong competitor in other freight car equipment such as bogies, 
wheels, and axles. It is uniquely positioned as the current face of 
Faiveley brake components to the marketplace (through ARF) and has been 
the expected conduit through which FTEN was to be marketed by Faiveley 
absent the merger. Amsted's intimate familiarity with the products, the 
personnel, the AAR approval process, and the relevant customers should 
ensure that in its hands the Divestiture Assets will provide meaningful 
competition.
    Under Paragraph IV(I) of the proposed Final Judgment, in the event 
Amsted is unable to acquire the Divestiture Assets, another Acquirer 
may purchase the Divestiture Assets, subject to approval by the 
Department in its sole discretion. The divestiture of assets must be 
accomplished as a single divestiture of all the Divestiture Assets to a 
single Acquirer. The Divestiture Assets may not be sold piecemeal. This 
is to protect the integrity of the Divestiture Assets as an ongoing, 
viable business and to enable the existing business to continue as a 
vigorous competitor in the future.
    Section XI of the proposed Final Judgment requires Wabtec to 
provide notification to the Antitrust Division of certain proposed 
acquisitions not otherwise subject to filing under the Hart-Scott 
Rodino Act, 15 U.S.C. 18a (the ``HSR Act''), and in the same format as, 
and per the instructions relating to the notification required under 
that statute. The notification requirement applies in the case of any 
direct or indirect acquisitions of any assets of or interest in any 
entity engaged in certain activities relating to freight car brake 
systems or components in the United States. Section XI further provides 
for waiting periods and opportunities for the United States to obtain 
additional information similar to the provisions of the HSR Act before 
such acquisitions can be consummated.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this

[[Page 78196]]

Competitive Impact Statement in the Federal Register, or the last date 
of publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court. In 
addition, comments will be posted on the U.S. Department of Justice, 
Antitrust Division's Internet Web site and, under certain 
circumstances, published in the Federal Register.
    Written comments should be submitted to: Maribeth Petrizzi, Chief, 
Litigation II Section, 450 Fifth Street NW., Suite 8700, Antitrust 
Division, United States Department of Justice, Washington, DC 20530.

The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against Wabtec's acquisition of 
Faiveley. The United States is satisfied, however, that the divestiture 
of assets described in the proposed Final Judgment will preserve 
competition for the development, manufacture, and sale of certain 
components of a freight car brake system, including hand brakes, slack 
adjusters, truck-mounted brake assemblies, empty load devices, brake 
cylinders, and control valves, in the relevant markets identified by 
the United States. Thus, the proposed Final Judgment would achieve all 
or substantially all of the relief the United States would have 
obtained through litigation, but avoids the time, expense, and 
uncertainty of a full trial on the merits.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty-day comment 
period, after which the court shall determine whether entry of the 
proposed Final Judgment is ``in the public interest.'' 15 U.S.C. 
16(e)(1). In making that determination, the court, in accordance with 
the statute as amended in 2004, is required to consider:

    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

Id. at Sec.  16(e)(1)(A) & (B). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v. U.S. Airways 
Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting that the 
court's ``inquiry is limited'' because the government has ``broad 
discretion'' to determine the adequacy of the relief secured through a 
settlement); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 
Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. 
Aug. 11, 2009) (noting that the court's review of a consent judgment is 
limited and only inquires ``into whether the government's determination 
that the proposed remedies will cure the antitrust violations alleged 
in the complaint was reasonable, and whether the mechanism to enforce 
the final judgment are clear and manageable.'').\1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, a court conducting inquiry under the APPA may 
consider, among other things, the relationship between the remedy 
secured and the specific allegations set forth in the government's 
complaint, whether the decree is sufficiently clear, whether 
enforcement mechanisms are sufficient, and whether the decree may 
positively harm third parties. See Microsoft, 56 F.3d at 1458-62. With 
respect to the adequacy of the relief secured by the decree, a court 
may not ``engage in an unrestricted evaluation of what relief would 
best serve the public.'' United States v. BNS, Inc., 858 F.2d 456, 462 
(9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 
666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United 
States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 
2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also U.S. Airways, 8 F. Supp. 3d at 75 (noting that 
a court should not reject the proposed remedies because it believes 
others are preferable); Microsoft, 56 F.3d at 1461 (noting the need for 
courts to be ``deferential to the government's predictions as to the 
effect of the proposed remedies''); United States v. Archer-Daniels-
Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court 
should grant due respect to the government's prediction as to the 
effect of proposed remedies, its perception of

[[Page 78197]]

the market structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461); United States v. Alcan 
Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the 
consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable; InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (concluding that 
``the `public interest' is not to be measured by comparing the 
violations alleged in the complaint against those the court believes 
could have, or even should have, been alleged''). Because the ``court's 
authority to review the decree depends entirely on the government's 
exercising its prosecutorial discretion by bringing a case in the first 
place,'' it follows that ``the court is only authorized to review the 
decree itself,'' and not to ``effectively redraft the complaint'' to 
inquire into other matters that the United States did not pursue. 
Microsoft, 56 F.3d at 1459-60. As this Court confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to make a mockery of judicial power.'' 489 F. Supp. 2d at 
15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d 
at 76 (indicating that a court is not required to hold an evidentiary 
hearing or to permit intervenors as part of its review under the Tunney 
Act). This language codified what Congress intended when it enacted the 
Tunney Act in 1974, as the author of this legislation, Senator Tunney 
explained: ``The court is nowhere compelled to go to trial or to engage 
in extended proceedings which might have the effect of vitiating the 
benefits of prompt and less costly settlement through the consent 
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen. 
Tunney). Rather, the procedure for the public interest determination is 
left to the discretion of the court, with the recognition that the 
court's ``scope of review remains sharply proscribed by precedent and 
the nature of Tunney Act proceedings.'' SBC Commc'ns, 489 F. Supp. 2d 
at 11.\3\ A court can make its public interest determination based on 
the competitive impact statement and response to public comments alone. 
U.S. Airways, 38 F. Supp. 3d at 76.
---------------------------------------------------------------------------

    \3\ See also United States v. Enova Corp., 107 F. Supp. 2d 10, 
17 (D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
---------------------------------------------------------------------------

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

    Dated: October 26, 2016.

Respectfully submitted,
/s/--------------------------------------------------------------------
DOHA MEKKI
United States Department of Justice
Antitrust Division, Litigation II Section
450 Fifth Street NW., Suite 8700
Washington, DC 20530
Telephone: (202) 598-8023
Facsimile: (202) 514-9033
Doha.mekki@usdoj.gov

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Westinghouse Air Brake 
Technologies Corp., Faiveley Transport S.A., and Faiveley Transport 
North America, Defendants.

Case No.: 1:16-cv-02147
Judge: Tanya S. Chutkan
Filed: 10/26/2016

Proposed Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on October 26, 2016, the United States and defendants, Westinghouse Air 
Brake Technologies Corp., Faiveley Transport S.A., and Faiveley 
Transport North America, by their respective attorneys, have consented 
to the entry of this Final Judgment without trial or adjudication of 
any issue of fact or law, and without this Final Judgment constituting 
any evidence against or admission by any party regarding any issue of 
fact or law;
    And whereas, defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights and assets by the defendants to 
assure that competition is not substantially lessened;
    And whereas, the United States requires defendants to make a 
certain divestiture for the purpose of remedying the loss of 
competition alleged in the Complaint;
    And whereas, defendants have represented to the United States that 
the divestiture required below can and will be made and that defendants 
will later raise no claim of hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture provisions contained 
below;
    Now therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. 18).

[[Page 78198]]

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means Amsted Rail Company, Inc., or another entity 
to which defendants divest the Divestiture Assets.
    B. ``Wabtec'' means defendant Westinghouse Air Brake Technologies 
Corp., a Delaware corporation with its headquarters in Wilmerding, 
Pennsylvania, its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships and joint ventures, and 
their directors, officers, managers, agents, and employees.
    C. ``Faiveley'' means defendant Faiveley Transport S.A., a French 
corporation with its headquarters in Gennevilliers, France, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees. ``Faiveley'' includes 
defendant Faiveley Transport North America, a New York corporation 
headquartered in Greenville, South Carolina, a wholly-owned subsidiary 
of Faiveley Transport S.A.
    D. ``Amsted'' means Amsted Rail Company, Inc., an Illinois 
corporation with its headquarters in Chicago, Illinois, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees. Amsted is a wholly-owned subsidiary of 
Amsted Industries Incorporated of Chicago, Illinois.
    E. ``Amsted Rail Faiveley LLC'' means the ongoing business and all 
associated assets of a joint venture that currently exists between 
Faiveley and Amsted, was established in 2010 for the purpose of 
manufacturing and selling freight car brake components, and has 
headquarters located in Greenville, South Carolina.
    F. ``FTEN control valve'' means the ongoing project and all 
associated assets of the freight car brake control valve for freight 
car brake systems developed or under development by Faiveley.
    G. ``Divestiture Assets'' means:
    1. Faiveley's full and complete interest, rights, and property in 
Amsted Rail Faiveley LLC and the FTEN control valve;
    2. All tangible assets relating to Amsted Rail Faiveley LLC and the 
FTEN control valve, including, but not limited to, research and 
development activities; all manufacturing equipment, tooling and fixed 
assets, including, at the option of the Acquirer, the braking 
simulation testing equipment known as the ``whale'' located at the 
Greenville, South Carolina, personal property, inventory, office 
furniture, materials, supplies, and other tangible property; all 
licenses, permits and authorizations issued by any governmental 
organization; all contracts, teaming arrangements, agreements, leases, 
commitments, certifications, and understandings, including supply 
agreements; all customer lists, contracts, accounts, and credit 
records; all repair and performance records and all other records; and
    3. All intangible assets relating to Amsted Rail Faiveley LLC and 
the FTEN control valve, including, but not limited to, all patents, 
licenses and sublicenses, intellectual property, copyrights, 
trademarks, trade names, service marks, and service names; technical 
information, computer software and related documentation, know-how, 
trade secrets, drawings, blueprints, designs, design protocols, and 
design tools and simulation capability; specifications for materials; 
specifications for parts and devices; safety procedures for the 
handling of materials and substances; quality assurance and control 
procedures; all manuals and technical information Faiveley provides to 
its own employees, customers, suppliers, agents or licensees; and all 
research data, including, but not limited to, designs of experiments, 
and the results of successful and unsuccessful designs and experiments.

III. Applicability

    A. This Final Judgment applies to Wabtec and Faiveley, as defined 
above, and all other persons in active concert or participation with 
any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.
    B. If, prior to complying with Section IV and V of this Final 
Judgment, defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they shall require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants need not obtain such an 
agreement from the Acquirer of the assets divested pursuant to this 
Final Judgment.

IV. Divestiture

    A. Defendants are ordered and directed, within twenty (20) calendar 
days after the signing of the Hold Separate Stipulation and Order in 
this matter to divest the Divestiture Assets in a manner consistent 
with this Final Judgment to Amsted or an Acquirer acceptable to the 
United States, in its sole discretion. The United States, in its sole 
discretion, may agree to one or more extensions of this time period not 
to exceed sixty (60) calendar days in total, and shall notify the Court 
in such circumstances. Defendants agree to use their best efforts to 
divest the Divestiture Assets as expeditiously as possible.
    B. In the event defendants are attempting to divest the Divestiture 
Assets to an Acquirer other than Amsted, defendants promptly shall make 
known, by usual and customary means, the availability of the 
Divestiture Assets. Defendants shall inform any person making an 
inquiry regarding a possible purchase of the Divestiture Assets that 
they are being divested pursuant to this Final Judgment and provide 
that person with a copy of this Final Judgment.
    C. In accomplishing the divestiture ordered by this Final Judgment, 
defendants shall offer to furnish to all prospective Acquirers, subject 
to customary confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process except such information or documents subject to the 
attorney-client privileges or work-product doctrine. Defendants shall 
make available such information to the United States at the same time 
that such information is made available to any other person.
    D. Defendants shall provide the Acquirer and the United States 
information relating to Faiveley personnel with responsibilities for 
Amsted Rail Faiveley LLC or the FTEN control valve to enable the 
Acquirer to make offers of employment. Defendants will not interfere 
with any negotiations by the Acquirer to employ any Faiveley employee 
whose primary responsibility is the production, development, and sale 
of products relating to Amsted Rail Faiveley LLC and the FTEN control 
valve.
    E. Defendants shall permit the Acquirer of the Divestiture Assets 
to have reasonable access to personnel and to make inspections of the 
physical facilities relating to the Divestiture Assets; access to any 
and all environmental, zoning, and other permit documents and 
information; and access to any and all financial, operational, or other 
documents and information customarily provided as part of a due 
diligence process.
    F. Defendants shall warrant to the Acquirer(s) that each asset will 
be operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.

[[Page 78199]]

    H. Defendants shall warrant to the Acquirer that there are no 
material defects in the environmental, zoning or other permits 
pertaining to the operation of each asset, and that following the sale 
of the Divestiture Assets, defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Divestiture Assets.
    I. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by Divestiture Trustee appointed 
pursuant to Section V, of this Final Judgment, shall include the entire 
Divestiture Assets, and shall be accomplished in such a way as to 
satisfy the United States, in its sole discretion, that the Divestiture 
Assets can and will be used by the Acquirer as part of a viable, 
ongoing business in the design, development, manufacture, marketing, 
servicing, distribution, and sale of products relating to Amsted Rail 
Faiveley LLC and the FTEN control valve. The divestiture, whether 
pursuant to Section IV or V of this Final Judgment, shall be made to an 
Acquirer that, in the United States's sole judgment, has the intent and 
capability (including the necessary managerial, operational, technical 
and financial capability) of competing effectively in the design, 
development, manufacture, marketing, servicing, distribution, and sale 
of products relating to Amsted Rail Faiveley LLC and the FTEN control 
valve; and that none of the terms of any agreement between the Acquirer 
and defendants give defendants the ability unreasonably to raise the 
Acquirer's costs, to lower the Acquirer's efficiency, or otherwise to 
interfere in the ability of the Acquirer to compete effectively.

V. Appointment of Divestiture Trustee

    A. If defendants have not divested the Divestiture Assets within 
the time period specified in Paragraph IV(A), defendants shall notify 
the United States of that fact in writing. Upon application of the 
United States, the Court shall appoint a Divestiture Trustee selected 
by the United States and approved by the Court to effect the 
divestiture of the Divestiture Assets.
    B. After the appointment of a Divestiture Trustee becomes 
effective, only the Divestiture Trustee shall have the right to sell 
the Divestiture Assets. The Divestiture Trustee shall have the power 
and authority to accomplish the divestiture to an Acquirer acceptable 
to the United States at such price and on such terms as are then 
obtainable upon reasonable effort by the Divestiture Trustee, subject 
to the provisions of Sections IV, V, and VI of this Final Judgment, and 
shall have such other powers as this Court deems appropriate. Subject 
to Paragraph V(D) of this Final Judgment, the Divestiture Trustee may 
hire at the cost and expense of defendants any investment bankers, 
attorneys, or other agents, who shall be solely accountable to the 
Divestiture Trustee, reasonably necessary in the Divestiture Trustee's 
judgment to assist in the divestiture. Any such investment bankers, 
attorneys, or other agents shall serve on such terms and conditions as 
the United States approves including confidentiality requirements and 
conflict of interest certifications.
    C. Defendants shall not object to a sale by the Divestiture Trustee 
on any ground other than the Divestiture Trustee's malfeasance. Any 
such objections by defendants must be conveyed in writing to the United 
States and the Divestiture Trustee within ten (10) calendar days after 
the Divestiture Trustee has provided the notice required under Section 
VI.
    D. The Divestiture Trustee shall serve at the cost and expense of 
Wabtec pursuant to a written agreement, on such terms and conditions as 
the United States approves, including confidentiality requirements and 
conflict of interest certifications. The Divestiture Trustee shall 
account for all monies derived from the sale of the assets sold by the 
Divestiture Trustee and all costs and expenses so incurred. After 
approval by the Court of the Divestiture Trustee's accounting, 
including fees for its services yet unpaid and those of any 
professionals and agents retained by the Divestiture Trustee, all 
remaining money shall be paid to Wabtec and the trust shall then be 
terminated. The compensation of the Divestiture Trustee and any 
professionals and agents retained by the Divestiture Trustee shall be 
reasonable in light of the value of the Divestiture Assets and based on 
a fee arrangement providing the Divestiture Trustee with an incentive 
based on the price and terms of the divestiture and the speed with 
which it is accomplished, but timeliness is paramount. If the 
Divestiture Trustee and Wabtec are unable to reach agreement on the 
Divestiture Trustee's or any agent's or consultant's compensation or 
other terms and conditions of engagement within fourteen (14) calendar 
days of appointment of the Divestiture Trustee, the United States may, 
in its sole discretion, take appropriate action, including making a 
recommendation to the Court. The Divestiture Trustee shall, within 
three (3) business days of hiring any other professionals or agents, 
provide written notice of such hiring and the rate of compensation to 
defendants and the United States.
    E. Defendants shall use their best efforts to assist the 
Divestiture Trustee in accomplishing the required divestiture. The 
Divestiture Trustee and any consultants, accountants, attorneys, and 
other agents retained by the Divestiture Trustee shall have full and 
complete access to the personnel, books, records, and facilities of the 
business to be divested, and defendants shall develop financial and 
other information relevant to such business as the Divestiture Trustee 
may reasonably request, subject to reasonable protection for trade 
secret or other confidential research, development, or commercial 
information or any applicable privileges. Defendants shall take no 
action to interfere with or to impede the Divestiture Trustee's 
accomplishment of the divestiture.
    F. After its appointment, the Divestiture Trustee shall file 
monthly reports with the United States and, as appropriate, the Court 
setting forth the Divestiture Trustee's efforts to accomplish the 
divestiture ordered under this Final Judgment. To the extent such 
reports contain information that the Divestiture Trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. Such reports shall include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person. The Divestiture Trustee shall maintain 
full records of all efforts made to divest the Divestiture Assets.
    G. If the Divestiture Trustee has not accomplished the divestiture 
ordered under this Final Judgment within six months after its 
appointment, the Divestiture Trustee shall promptly file with the Court 
a report setting forth (1) the Divestiture Trustee's efforts to 
accomplish the required divestiture, (2) the reasons, in the 
Divestiture Trustee's judgment, why the required divestiture has not 
been accomplished, and (3) the Divestiture Trustee's recommendations. 
To the extent such report contains information that the Divestiture 
Trustee deems confidential, such report shall not be filed in the 
public docket of the Court. The Divestiture Trustee shall at the same 
time furnish such report to the United States which shall have the 
right to make additional recommendations consistent with the purpose of 
the trust. The Court thereafter shall enter such

[[Page 78200]]

orders as it shall deem appropriate to carry out the purpose of the 
Final Judgment, which may, if necessary, include extending the trust 
and the term of the Divestiture Trustee's appointment by a period 
requested by the United States.
    H. If the United States determines that the Divestiture Trustee has 
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint a substitute 
Divestiture Trustee.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, defendants or the Divestiture Trustee, whichever 
is then responsible for effecting the divestiture required herein, 
shall notify the United States of any proposed divestiture required by 
Section IV or V of this Final Judgment. If the Divestiture Trustee is 
responsible, it shall similarly notify defendants. The notice shall set 
forth the details of the proposed divestiture and list the name, 
address, and telephone number of each person not previously identified 
who offered or expressed an interest in or desire to acquire any 
ownership interest in the Divestiture Assets, together with full 
details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from defendants, 
the proposed Acquirer, any other third party, or the Divestiture 
Trustee, if applicable, additional information concerning the proposed 
divestiture, the proposed Acquirer, and any other potential Acquirer. 
Defendants and the Divestiture Trustee shall furnish any additional 
information requested within fifteen (15) calendar days of the receipt 
of the request, unless the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from defendants, the 
proposed Acquirer, any third party, and the Divestiture Trustee, 
whichever is later, the United States shall provide written notice to 
defendants and the Divestiture Trustee, if there is one, stating 
whether or not it objects to the proposed divestiture. If the United 
States provides written notice that it does not object, the divestiture 
may be consummated, subject only to defendants' limited right to object 
to the sale under Paragraph V(C) of this Final Judgment. Absent written 
notice that the United States does not object to the proposed Acquirer 
or upon objection by the United States, a divestiture proposed under 
Section IV or V shall not be consummated. Upon objection by defendants 
under Paragraph V(C), a divestiture proposed under Section V shall not 
be consummated unless approved by the Court.

VII. Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV or V of this Final Judgment.

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has been 
accomplished, defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestiture 
ordered by this Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or V, defendants 
shall deliver to the United States an affidavit as to the fact and 
manner of its compliance with Section IV or V of this Final Judgment. 
Each such affidavit shall include the name, address, and telephone 
number of each person who, during the preceding thirty (30) calendar 
days, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Divestiture Assets, and 
shall describe in detail each contact with any such person during that 
period. Each such affidavit shall also include a description of the 
efforts defendants have taken to solicit buyers for the Divestiture 
Assets, and to provide required information to prospective Acquirers, 
including the limitations, if any, on such information. Assuming the 
information set forth in the affidavit is true and complete, any 
objection by the United States to information provided by defendants, 
including limitation on information, shall be made within fourteen (14) 
calendar days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions defendants 
have taken and all steps defendants have implemented on an ongoing 
basis to comply with Section VIII of this Final Judgment. Defendants 
shall deliver to the United States an affidavit describing any changes 
to the efforts and actions outlined in defendants' earlier affidavits 
filed pursuant to this section within fifteen (15) calendar days after 
the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestiture has been completed.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Hold Separate 
Stipulation and Order, or of determining whether the Final Judgment 
should be modified or vacated, and subject to any legally recognized 
privilege, from time to time authorized representatives of the United 
States Department of Justice, including consultants and other persons 
retained by the United States, shall, upon written request of an 
authorized representative of the Assistant Attorney General in charge 
of the Antitrust Division, and on reasonable notice to defendants, be 
permitted:
    1. Access during defendants' office hours to inspect and copy, or 
at the option of the United States, to require defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
defendants, relating to any matters contained in this Final Judgment; 
and
    2. to interview, either informally or on the record, defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
defendants shall submit written reports or response to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.

[[Page 78201]]

    D. If at the time information or documents are furnished by 
defendants to the United States, defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(g) of the 
Federal Rules of Civil Procedure, and defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(g) of the Federal Rules of Civil Procedure,'' then the United 
States shall give defendants ten (10) calendar days notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

XI. Notification

    A. Unless such transaction is otherwise subject to the reporting 
and waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
during the term of this Final Judgment, Wabtec, without providing 
advance notification to the Antitrust Division, shall not directly or 
indirectly acquire any assets of or any interest, including, but not 
limited to, any financial, security, loan, equity, or management 
interest, in any entity engaged in the design, development, production 
(including the provision of any input product comprising five percent 
or more of the value of any final product), marketing, servicing, 
distribution, or sale of freight car brake systems or components 
thereof in the United States.
    B. Such notification shall be provided to the Antitrust Division in 
the same format as, and per the instructions relating to the 
Notification and Report Form set forth in the Appendix to Part 803 of 
Title 16 of the Code of Federal Regulations as amended, except that the 
information requested in Items 5 through 9 of the instructions must be 
provided only about freight car brake systems or components thereof 
described in Section V of the Complaint filed in this matter (including 
any input product comprising five percent or more of the value of any 
final product). Notification shall be provided at least thirty (30) 
calendar days prior to acquiring any such interest, and shall include, 
beyond what may be required by the applicable instructions, the names 
of the principal representatives of the parties to the agreement who 
negotiated the agreement, and any management or strategic plans 
discussing the proposed transaction. If within the thirty-day period 
after notification, representatives of the Antitrust Division make a 
written request for additional information, Wabtec shall not consummate 
the proposed transaction or agreement until thirty (30) calendar days 
after submitting all such additional information. Early termination of 
the waiting periods in this paragraph may be requested and, where 
appropriate, granted in the same manner as is applicable under the 
requirements and provisions of the HSR Act and rules promulgated 
thereunder. This Section shall be broadly construed and any ambiguity 
or uncertainty regarding the filing of notice under this Section shall 
be resolved in favor of filing notice.

XII. No Reacquisition

    Wabtec may not reacquire any part of the Divestiture Assets during 
the term of this Final Judgment.

XIII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States' responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.
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United States District Judge

[FR Doc. 2016-26781 Filed 11-4-16; 8:45 am]
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